Summer 2004 • Issue 14, page 18

Profile: Stuart Kaplan

By Rense, Kirk*

(As is the case with many members of the California Receivers Forum, Stuart Kaplan’s career path has zig-zagged between finance and business and law and combinations thereof, as you will discover in this fascinating profile, written by Mr. Kaplan with an assist from Ron Oliner.)

How did I ever end up in this abrasive area of human activity? That was the question posed by my peace-loving sweetheart of 14 plus years, Barbara Meislin, known locally as “The Purple Lady.” As with so many other receivers, the response points to a variety of flukes rather than a purely rational decision-making process. As a backdrop, I have always been attracted to challenges and problem-solving. This process leads to some successes and, as all receivers know, also a good deal of built-in frustration as we try to “de-adversarialize” the receivership process.

Backing up, my first significant challenge was simply getting through high school, Boston Latin School, the oldest high school in the country, whose official color is also purple. From Latin School it was on to Harvard College for an undergraduate degree; but then enough was enough of “if it’s old, it’s good” and I headed West to attend Stanford Law School. That first summer I worked in a cannery; however, the next summer a position at the other end of the spectrum at an investment banking firm introduced me to the world of high finance, as a “boardmarker” scratching in chalk quotations from a ticker tape onto a blackboard. Technology has come a long way since then! From there I have always focused on some combination of law, business, and finance.

Accordingly, my first full time employment upon graduating law school was at Wells Fargo Bank as a financial analyst. They sent me to U.C. School of Business for an extension program in how to read a balance sheet and related higher arts. As an associate member of the local analysts society for the next three decades I have actually gotten to testify a few times as an expert witness. Then came a four-year career with the U.S. Securities and Exchange Commission as a trial attorney. This was not only lots of fun, (well not the part about objecting to fees), but led directly to participation in some significant reorganization proceedings. The SEC acted as amicus under Chapter X of the old Bankruptcy Act in cases where there was a large public investor interest. This position called for lots of travel around the West in that capacity, and meeting with U.S. District and Bankruptcy Judges as well as a variety of attorneys working in the areas of insolvency and receivership. A three-year professional relocation thereafter to Los Angeles was very interesting. I was very fortunate to work as an associate with Sulmeyer Kupetz, who acted not only as counsel in bankruptcy and receivership cases, but also as Court-appointed officers in such proceedings.

Opening a Private Practice
In 1967 I opened my own practice back in San Francisco, similarly patterned so as to handle legal representation as well as administrative matters. I opened the office with Tony Serra, sharing space thereafter for over thirty years, incongruously enough, with some great criminal defense lawyers. It provided a wonderful change of pace, to say the least. During this time, a seventeen-year partnership during the ‘70’s and ‘80’s with Dean Pasvankias worked super-well; one of our major cases was representing as counsel the Alioto family-controlled Pacific Far East Lines. We still maintain adjoining dwellings at Muir Beach on the Marin County coast, which I call my Shangri-la hideaway.

My first appointment in private practice had a strange title, “Controller” for Eichler Homes, at the time in 1967 the largest homebuilder in Northern California. That proceeding evolved into a Chapter X trusteeship; however, my expertise in that arcane field was to become near-useless as Congress some years later through the new and expanded Chapter 11 (note change from Roman to Arabic numerals in the process) of the Bankruptcy Code not only did away with the need for such expertise, but alas there was no longer a statutory requirement for an independent trustee to be appointed. Debtors-in-possession became the order of the day, with trusteeships imposed very infrequently.

From Controller to Trustee to Receiver
Meanwhile, in addition to various Chapter X trusteeships, I luckily found myself active as Receiver in a growing number of Federal and State tax shelter and other partnership situations where a Receiver was requested either by the SEC, or the State Attorney General on behalf of the Banking, Real Estate, or Corporations Commissioner, or by private investors or institutions. All kinds of labels have been used for these appointments including no doubt some unflattering ones: temporary, interim, limited receiver, and also special master or controller, but essentially with receiver powers.

I loved almost all of these cases. The most memorable are hotels, including a Sheraton in Rancho Cordova and a Hilton in Redding, oil drilling programs (GeoTek, with its entertainment industry and other high profile investors, such as Bob Dylan, Nancy Sinatra, and Otis Chandler), cattle ranching and farming ,including Sugar Loaf Berries, one of the nation’s largest strawberry producers, a “ranch” of a different sort called Moonlight Ranch located outside of Carson City, Nevada, auto dealerships including the largest Toyota dealership in Northern California, nursing homes, venture capital entities, and various types of lawyer vs. lawyer situations ranging from solo practices to office sharing disasters to law firms. The most interesting of the law firm cases was acting as Special Master, but with receiver duties, in the breakup of the Belli law firm in 1993; yes, the King of Torts. There , not only were the usual receivership issues present loud and clear, but in addition I found dealing with some of the firm’s cases quite fascinating. Currently I have what is for me a new title ,”Neutral Manager,” in co-owner litigation flowing out of an arbitration proceeding. Then as another one-of-a-kind, I am acting as receiver in Probate Court, the origins of which I’m not totally sure.

Importance of Independence
I have always found it challenging to convince the parties that a receiver is indeed independent, or as Black’s Law Dictionary calls it, “indifferent,” and not an agent of one or another side. Another sometimes strange concept to me is “maintaining the status quo” in a dynamic context which won’t necessarily permit a standstill while litigation on the merits drags on. Yet another unusual concept for me is that of the totally ex parte receivership, being one with no notice whatsoever. This drastic remedy would normally be considered only when there are strongly supported allegations of fraud, chicanery, or imminent disaster. I find that the needs of all sides have to be very carefully balanced during this interim period of such an extraordinary remedy until the parties are afforded a hearing. I have been called upon to participate in this approach most often in a regulatory context, or more stressfully in a marital dissolution backdrop where there is a high degree of mistrust. There was a time when this remedy became for me almost a subspecialty!

In 1976-7 I served as Chair of the Commercial Law and Bankruptcy Section of the San Francisco Bar Association Throughout the years I participated in presenting various seminars, and also authored an article titled “The Courts and Equity Receiverships,” Los Angeles Lawyer, May, 1978. This article is still referred to from time to time in this field that is so sparse on authority; the greatest kick was seeing it cited at some length by the Ninth Circuit, albeit buried in footnote 11, in a case wrestling with the issue of whether to liquidate an entity in a bankruptcy or receivership context, Securities and Exchange Commission v. Lincoln Thrift, 577 F.2d 600 (9th Cir. 1978). The answer: “it all depends.”

Balance in Life Is the Key
I have always personally believed that balance is the key. My Muir Beach hideaway helps in that regard. Two grown sons with very different lifestyles is another plus. James, with a wife and three kids, recently relocated to London after living for many years in Hong Kong, works with developing resort hotels. This has been a great boon for his travel-loving freeloading dad; it also challenged me to learn “survival” Mandarin. Son Zach in Alameda lives, breathes, and sells recumbent bicycles, a wonderful means of alternative transportation to my aging 1967 Citroen cabriolet. We actually beat my own speed record at 49.7 mph on an unusual beast, a RANSScreamer tandem recumbent, while sitting as stoker of course. Then there is the Purple Lady.

*RON OLINER, ESQ., a partner with Buchalter, Nemer, Fields & Younger in that firm’s San Francisco office specializing in bankruptcy and business law as well as receivership and trustee representation, assisted in the preparation of this article.