|
I was appointed as the court’s receiver in the case of Taylor v. Unruh,
Los Angeles Superior Court, Case No. BC597720 - a case involving a
partnership dispute over an apartment building. My appointing order gave
me the authority to manage, control, care for, preserve and specifically
collect the rents for that property. I sent introduction letters to the
tenants together with a copy of the appointing order and requested they
tender their rents to the management company I hired. A secured creditor
also sent letters to the tenants demanding that they tender their rents to
him instead of to the management company. He believed that his note and
deed of trust were superior to the court’s appointing order, which I was
enforcing. I tried to reason with the secured creditor that we should go
jointly before the appointing court to seek instructions to resolve the
matter, but he would not agree. The plaintiff enjoined the secured
creditor in the lawsuit, and I sought and obtained an injunctive order
preventing him from attempting to collect the rents. In order to avoid
complying with the injunctive order, the secured creditor transferred his
note and deed of trust to another party who took the same position he did
and demanded the tenants pay their rents to her. Plaintiff’s counsel named
this new party to the lawsuit as well, and I obtained another injunctive
order against this new party to stop her from trying to collect the rents.
This party appealed the state court’s injunctive order based upon the
belief that her note and deed of trust were senior to the court’s
receivership order. In affirming the state court’s order granting my
request for an injunction against the secured creditors, the appellate
court, in an unpublished opinion provided the following discussion in
finding for the Receiver1.
The court found that the granting of the injunction prohibiting the
creditor from collecting the rents was appropriate under Code of Civil
Procedure section 526(a)(3). An injunction may be granted “[w]hen it
appears, during the litigation, that a party to the action is doing, or
threatens, or is about to do, or is procuring or suffering to be done,
some act in violation of the rights of another party to the action
respecting the subject of the action, and tending to render the judgment
ineffectual.” ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006,
1023 (“The court may grant a preliminary injunction when there is evidence
of the threat of committing an act in violation of the rights of another
party respecting the subject of the action”). The secured creditor and argued that “the Trial Court’s order enjoining
[her] collection of rents under a valid Deed of Trust assignment of rents
interferes with [her] statutory rights as a matter of law, and is not
based upon disputed facts.” She argued that she had rights under Civil
Code section 2938(c) as a holder of an assignment of rents from real
property made in connection with an obligation secured by the property.
Specifically:
“Upon default of the assignor under the obligation secured by the
assignment of . . . rents . . . , the assignee shall be entitled to
enforce the assignment in accordance with this section. On and after the
date the assignee takes one or more of the enforcement steps described in
this subdivision, the assignee shall be entitled to collect and receive
all rents . . . that have accrued but remain unpaid and uncollected by the
assignor or its agent or for the assignor’s benefit on that date, and all
rents . . . that accrue on or after the date. The assignment shall be
enforced by one or more of the following: . . . (3) Delivery to any one or
more of the tenants of a written demand for turnover of rents . . . in the
form specified in subdivision (k), a copy of which demand shall also be
delivered to the assignor . . . .” (Civ. Code, § 2938 (c))
The secured creditor argued that the trial court committed legal error by
enjoining her from exercising her right under section 2938(c). The court
found, however, that the secured creditor did not have those rights
because the trial court’s order appointing the receiver had directed the
tenants to pay rent to the receiver. Section 2938(d) provides that a
tenant’s obligation to pay rent to an assignee under subdivision (c)
ceases upon “receipt by the tenant of a written notice from a court
directing the tenant to pay the rent in a different manner.” The court
noted that the secured creditor did not dispute that tenants of the
property received the court’s order directing them to pay rent to the
receiver and that the secured creditor wrote the tenants with instructions
to ignore it.
The appellate court upheld the lower court’s ruling, finding that the
trial court did not err in enjoining the secured creditor from collecting
rents. Accordingly, as long as a receiver gives appropriate notice to
tenants of an appointing order of a court, a receiver should not face any
issue in establishing that his right to collect rents is superior to that
of secured creditors.
1. The court ruling was written by Judge Segal, J. and concurred by Zelon,
P.J. and Feuer, J. for the Court of Appeal of The State of California,
Second Appellate District.
*Kevin Singer is the President of Receivership Specialists with offices
all throughout the Southwest. Mr. Singer has been a Court Appointed
Officer in over 350 cases in the last 18 years.
|
