This winter, Receivership News was pleased to have the opportunity to interview Sacramento County Superior Court Judge David I. Brown. Scott Sackett met with Judge Brown and learned about Judge Brown’s interesting journey to the courtroom and his views from the bench.

Judge Brown was appointed by Gov. Schwarzenegger in 2008. He currently sits in Dept. 53, one of only two Law and Motion Departments of the Court in Sacramento County. Together with Judge Raymond M. Cadei, Judge Brown oversees 99% of the law and motion activities in the county, including 99% of the receiver appointments. For Judge Brown, this equates to the review of between 5,000 and 6,000 motions every year and the issuance of between 20 and 25 written rulings every business day, not including ex-parte matters. I know from my experience appearing in Department 53, that even with this tremendous volume of work, Judge Brown does his homework and is always prepared to address the issues before him.

Judge Brown came to the court from modest circumstances. He grew up in a city housing project in the Bronx, where becoming a judge was not a common path. When he was 13, Judge Brown’s family moved to California to find a better life. But the family was faced with tragedy when his mother passed away from cancer shortly after arriving in California. Judge Brown persevered through his high school years, earned his Bachelor of Arts from California State University San Diego and his JD from the University of California at Davis in 1974. Following law school, Judge Brown passed the bar and became a lawyer at the age of 23. He had followed lockstep from college to law school to practicing attorney, because he knew from the age of 10 that he wanted to be a lawyer. He had always enjoyed the reading, writing, argument and discussion. By 1977, Judge Brown had founded his own law firm, Bailey and Brown. He specialized in all aspects of civil tort litigation including personal injury, insurance defense, general liability, construction defect, legal and medical malpractice, and he remained with his firm until 2008.

Talking about his legal career before he took the bench and specifically what he felt was his greatest accomplishment as a practicing attorney...

Judge Brown: “When my father asked me to represent him in front of the Court of Veterans Appeals. I said: ‘Dad, I just have never practiced in that area before.’ But, in my own firm, I always told my young lawyers that you get to learn the law and just hang the facts on it. Just like a suit of clothes on a hanger ... just flesh it out. So I decided to take my own advice. I learned the applicable law, went back to Washington DC, handled the case, and I won. My father didn’t believe it because he had been working on this thing for 30 years.”

Judge Brown’s father had been severely injured in the South Pacific while serving in the Navy during WWII. He had been classified at 80% disabled, but the reality was closer to 100%. That last 20% meant a huge difference in benefits to an injured veteran. Judge Brown was successful in his father’s case and used what he learned in this new (at the time) area of the law to represent several other veterans. “It was difficult to practice in this area of law because, at the time, there was no mechanism for payment. Many of those folks couldn’t afford lawyers and the awards weren’t large. However, today there is a mechanism in place to apply for fees for the payment of those services. Judge Brown noted that, “I think that it is a good idea that veterans get good representation and that there is a way to pay for good representation.”

This issue is still especially close to home for Judge Brown as his son is currently serving in the Navy at the same rank his father reached when he was injured, Petty Officer 2nd Class. His son served on a submarine, the USS Pennsylvania, and was recently promoted and stationed in Sacramento as a recruiting officer.

While Judge Brown’s son followed in his grandfather’s footsteps, Judge Brown’s daughter has followed in her father’s footsteps. She graduated from Georgetown with an LLM in Tax and is working for the Department of Justice in Washington DC.

During his thirty-plus years in practice, Judge Brown was recognized as an excellent trial lawyer and the recognition of his civility and professionalism in the practice of law has continued on after his appointment to the bench. Judge Brown was named “Judge of the Year” by both the American Board of Trial Advocates and the Capitol City Trial Lawyers Association. Judge Brown has been a speaker at events for the American Board of Trial Advocates all over the state, and he has lectured on new case law to the California Judges Association and spoken at Judicial Council educational seminars regarding law-and-motion.

When asked what he enjoyed most and least about serving on the Bench, he commented:

Judge Brown: “Well, there were a couple of surprises when I became a judge. I didn’t expect the isolation. I’ve been fortunate to develop some really good friends, Judge Kevin Culhane happened to be located in the chambers next door to mine, so I could call out to him or he could call out to me and that was a wonderful beginning relationship. It was collegial. But a lot times judges have their door shut because they are busy reading and researching. It is hard work, and I was shocked to find that judging can be a bit of a lonely profession. I have to say, what I like most is the intellectual challenge of it and oral argument. I like talking to people in the courtroom. I think my least favorite aspect is that many of the motions are very similar and can get a little repetitive.”

Judge Brown said that he gets, on average, about one receivership case each month. And that the type of receivership hasn’t really changed.

Judge Brown talked about his most interesting case involving a receivership.

Judge Brown: “The Gold Machine; One of my more interesting cases involved an Israeli machine that was extracting gold from the tailings in the county and it was actually doing it. The people who were running the machine weren’t paying even though they were extracting $50,000 to $60,000 worth of gold every two weeks. And the Israeli inventors finally said they wanted to get their machine back.”

It sounded like a good receivership opportunity to me but apparently the receiver never got to operate the machine or collect any gold.

As is the tradition with RN, I asked Judge Brown for his take on a number of receivership issues.

Question: What is the best way for a Receiver to ensure that his fees will be approved by the Court?

Judge Brown: “I believe in close scrutiny of the Receivership by the judge and the Court because I believe the Receiver is an arm of the court and I want specific instructions in the appointing order to guide the receiver’s actions. I try not to give too wide of a latitude to receivers in order to avoid accrual of excessive expenses. My thought is that to assure your fees get paid, don’t operate outside the powers set forth in the appointing Order.”

Question: Have you encountered a situation in which the receiver is appointed for little or no hourly fee or for a flat monthly fee or under some kind of arrangement? If so, how did you approach this?

Judge Brown: “Whenever I hear the word arrangement, my alarm bell starts to ring. I don’t think it is a good idea to agree to a fee arrangement, written or oral, with a foreclosing plaintiff. Only the Court can set the Receiver’s compensation and approve payment as is specified in CRC 3.1179 B. I think that it is great to have a statement in the Receiver’s papers saying that the Receiver doesn’t have any particular axe to grind with anybody. That the Receiver is neutral.”

Question: What is your take on whether a State Court may authorize receivership sales for real property free and clear of liens?

Judge Brown: “I have been told over the years by various experts in this field and judges that the California superior courts don’t have the authority to sell free and clear of liens. Only the Congress through the bankruptcy code has given a bankruptcy judge the authority to sell free and clear of liens. Keeping that thought in mind, there is a possible exception if the pending sale would garner proceeds sufficient to pay off all the liens with the liens attaching to the proceeds. In such a case, junior liens would retain their priority in distribution of the proceeds rather than being extinguished by a senior lien holder’s foreclosure sale. I started doing some research over the years to address the issue outside of this exception. I have a fairly recent unpublished case, Downtown Sunnyvale, January 2015 out of the 6th Appellate District. The receiver filed a motion to sell the property free and clear of liens and encumbrances. No opposition was filed, and the trial court granted the motion. At the end of the day, the court of appeal was not even presented with the question of whether or not that was a good idea. They let the whole thing go through without even mentioning anything about any invalidity or problem with free and clear liens. Then there is a published case from January of 2014, City of Riverside v. Horspool, 223 Cal. App. 4th 670 (2014). Headnote 14 of the opinion states that a Court of Equity has the power to order the sale of a property free and clear of liens and encumbrances. They site to a 1933 Third Circuit federal case and a 1935 Second Circuit federal case for that proposition. We do sit in equity, but I think the idea of free and clear is still up in the air despite Horspool. I’m not so sure that all the other districts within our state would subscribe to Horspool. But since there is not law on it, I guess it is up for grabs. However, it seems to be conventional wisdom that it is not a swell idea and most courts would be a little bit leery of doing that because there is no enabling legislation. I suspect people will cite Horspool, but I am not sure it is such a good idea. I actually Shepardized it and did not find one case that cited the Horspool case with respect to headnote 14. Nobody has sited it in reference to selling free and clear of liens. The proposition of the receiver selling free and clear might run afoul of federal statutes and, if it does, then maybe the sale would be declared invalid. Unraveling such a sale would be a lot tougher, with all kinds of liability issues, than never having done it in the first place.”

I asked Judge Brown what he enjoyed doing in his free time.

Judge Brown: “My wife and I decided that we would rather wear out, than rust out so we are big exercisers. We go to the gym every morning at 5:00 am. We enjoy bicycling. On the weekends, we take our bikes to Costco, which is about seven miles each way. The nice thing is we only can carry what we can fit in our backpacks and basket. So you can’t buy too much.”

“My wife and I are big travelers and some of my best experiences over the last ten years involved traveling. We have been to Israel, Istanbul, Ireland, Sweden, Denmark, China, Italy, and France. We never take trips with tours; we are not tour bus people. We walk, bicycle and take public transit. When we were in China we took public transit the whole time. When we got on the bus in downtown Beijing, the Chinese natives looked at us like we just crawled out of a spaceship. They were shocked that two westerners had gotten on a bus. My wife said, where are we going on this bus, and I said I don’t know. But for one yuan it was worth the ride around town. Getting lost in different places can be half the fun.”

During our discussion Judge Brown drew some comparisons between judges and receivers.

Judge Brown: “I think you have to apply common sense to the practice of judging just like receivers must do in administering a case. Judging is an art not a science. If it was a science you could get a cook book and follow the recipe every time. Hindsight is 20/20. I wish we had crystal balls. I have one on my desk. There is a crack in it. I like to tell counsel, I’ve got some news for you counsel, it’s broken, it doesn’t work. I keep it there to remind counsel that judges don’t have them. Sometimes we make mistakes. We do the best we can. I don’t think I have met anybody who did not want to do the best job he or she could as a judge.”

*Scott Sackett is the President and Founder of Fiduciary Management Technologies, Inc. (FMT). Scott serves as a court appointed receiver and dispersing agent. FMT provides case, claims, and estate management and accounting software to receivers, bankruptcy trustees, dispersing agents, and professional fiduciaries.