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District Court Judge Dickran M Tevrizian's Views on Receivers & Receiverships from State and Federal Court Perspectives By Rense, Kirk*
In 1985 then-President Reagan again appointed Judge Tevrizian to a judgeship, this time to the United States District Court, Central District of California. He was the first Armenian-American appointed to the federal bench. Judge Tevrizian received his undergraduate degree in finance and accounting from USC, graduating cum laude in 1962. He received his J.D. from the USC School of Law in 1965. He briefly worked for a national accounting firm before joining the law firm of Kirtland and Packard in 1966, where he practiced until his initial judicial appointment. Judge Tevrizian has received many honors, both from his legal peers in recognition of his outstanding legal abilities, and from public organizations in honor of contributions made outside the legal arena. He was named Trial Judge of the Year in 1987 by the California Trial Lawyers Association, the first federal judge to be so honored. He is one of the few federal judges to have been honored with the Los Angeles County Bar’s Outstanding Trial Jurist Award, in 1995. The Malibu Bar Association celebrated him as Federal Court Trial Judge of the Year in 1998. “I am the recipient of the American dream,” Judge Tevrizian commented in an interview with the Metropolitan News-Enterprise in 2002, upon being awarded the Maynard Toll Award for outstanding community service by the Legal Aid Foundation of Los Angeles. Judge Tevrizian was referring to the fact that he is the son of immigrants — his father immigrated to the United States from Hartoot, Turkey at the age of 19 and his mother was born in this country soon after her family’s arrival from Sevas, Turkey. Judge Tevrizian is an active member of the local Armenian American community, and in 1998 was awarded the Peter the Great Gold Medal of Honor from the United States Section of the Russian Academy of Natural Sciences in recognition of his accomplishments in the legal field. In 1999, the National Ethnic Coalition of Organizations, Inc. awarded Judge Tevrizian the Ellis Island Medal of Honor, given `to Americans of diverse origins for their outstanding contributions to their own ethnic groups and to American society.’ Judge Tevrizian has also served on the boards of many civic and charitable organizations, including the boards of the Southwestern School of Law, the Glendale Memorial Health Foundation, the QueensCare Health Foundation, the Armenian General Benevolent Union, the Glendale Memorial Hospital Foundation, the Armenian Eye Care Project, and the UCLA School of Public Policy, among others. He also served on the Board of Directors of Los Angeles High School and the Good Shepherd Home for homeless women. (Some information in this sketch was abstracted from stories carried by the Metropolitan News-Enterprise in 2002 and 2004.) The Receivership News is honored to present the following interview with Judge Dickran M. Tevrizian: Q: What are your views on how closely the appointing judge should control the actions of his or her receiver? Should receivers be vested with wide latitude of action to carry out their duties, or do you prefer they seek instruction from the court when confronted with a situation arguably beyond the clear instructions of the appointing order? A: I believe in close scrutiny of the receivership by the court. The receiver is an arm of the court, and I insist on specific instructions in the appointing order to guide his or her actions, instructions that are to be followed. The language of the order must be precise as possible regarding the receiver’s duties and authority. A request for additional instructions should be brought either ex parte or on regular notice whenever the receiver encounters a problem or issues not specifically addressed in the appointing order. I do not give wide latitude to receivers, in part to avoid the potential accrual of excessive costs and expenses in administering the receivership estate. Q: In the same vein, do you view a receiver as a direct extension of the appointing judge, whose actions are, essentially, the actions of the court? A: I view the receiver as a direct extension of the appointing judge, whose actions are the actions of the court. Q: A related question is whether the receiver may converse with the appointing judge ex parte (say, by telephone or email), or only formally, in filed pleadings or upon full advance notice to all parties? A: How and when the receiver may converse with the appointing judge depends upon the circumstances of the case. I prefer a formal writing to be prepared and submitted under seal or communication by telephone or in person with a court reporter recording the exchange. I do not like to communicate with my receiver unless the statement or conversation is preserved as a permanent part of the record. I prefer to record it, have it reported by a court reporter or submitted by way of an ex parte application or application on full notice. I prefer historical preservation on the record. I don’t like email – it is fraught with problems. I don’t mind telephone calls, so long as they are recorded or reported. Q: May a receiver discuss her or his actions in a case if contacted by a representative of the news media, or do you wish receivers to remain silent during the tenure of their appointment where the press is concerned? A: I instruct my receivers not to hold press conferences or answer questions from the news media. Such questions should be presented to the court by fully noticed or ex parte application and all the parties will discuss these questions on the record to see if a response is appropriate. Q: How flexibly do you use the receivership tool in commercial cases? Do you generally limit appointments to commercial property foreclosure situations and to preserve property pending resolution of ownership disputes? Or do employ receivers more broadly – as a financial investigative tool, for example, or to assess the continuing viability of a commercial enterprise in appropriate circumstances? A: Because I’m a federal judge, we don’t have a large volume of real property foreclosure receiverships (although I certainly did as a state court judge). They do most of those types of receiverships in pending bankruptcy liquidation matters and in state court, for the most part. It is rare in federal court that I get a receivership in a foreclosure proceeding. Generally I conduct receiverships in civil and criminal actions for fraud and other tortuous conduct brought by the SEC, FTC and other regulatory agencies. Where a company is an ongoing business and seems to be generating income then I will use a receiver to preserve the entity. If investigation of the business is required, generally I will appoint a receiver and expect the receiver to obtain the opinion of an expert to determine the viability of continuing the business. I don’t want the receiver to make such determinations without the benefit of expert advice and opinion. The receiver’s focus is to marshal and preserve assets. When it comes to potentially shutting down a business, the receiver should protect himself or herself by getting expert guidance on whether the receivership is viable. Q: Since you have employed receivers while sitting in both state and federal court, do you perceive any differences in how receivers are used in these respective jurisdictions? A: Yes. My answer to the last question covers some of this ground, as well. I think in both situations it is very, very important for the receiver to have a team or staff in place. I require formal reports from my receivers and complete accountings. This protects the receiver and the court from allegations that the receiver mishandled the case or ran the case for his or her own financial gain to the detriment of the parties. Q: Receivers are generally neutrals, required to be so by statute. But in a regulatory receivership context where a receiver has been appointed pursuant to statutory authority granted to select regulatory agencies, must that neutrality be maintained? Do you expect such a receiver to make an independent evaluation of the legality of the operation that is the focus of the regulatory complaint and report findings to the court? Or do you anticipate that your receiver will immediately shut down the business as a matter of course? A: I expect receivers to be neutrals. Absolutely. That’s part of the order. I don’t want the receiver going in there and making a quick decision without the court’s review. There are usually two sides to the story. I expect the receiver to preserve the status quo while presenting the facts to the court for sifting through in the courtroom. I expect the receiver to conduct an independent evaluation. The status quo is to be preserved until the court can make a fair and neutral evaluation of the activity complained of. Q: Where a receiver is sought by a plaintiff to be imposed over an insolvent entity (i.e. one that is not paying its obligations as they become due), are you willing to surcharge the plaintiff to ensure the company does not operate in the red while under your control? Will you allow a company to operate at a loss while your receiver is in place? Will you surcharge the plaintiff to ensure receiver’s fees and costs are paid? A: This is a really difficult question to give a yes or no answer to. Generally I will look to the receivership entity for costs of the receivership. Before any surcharge is to be made the court must go into detail about the kind of situation the company or entity is engaging in; whether it is an ownership or management dispute, or some other kind of receivership situation. I look at all the factors and make a decision as to how the receivership will be funded, who is to benefit. I may make the decision after the fact, in hindsight, rather than up front. Q: Do you require your receivers to seek payment of fees and expenses only by noticed motion, or do you allow payments to be made monthly (or periodically) after circulation of the receiver’s bills to all parties (assuming no objections and subject to a final noticed application at case end)? A: The receivers I appoint must make application to the court for payment of fees and expenses. What I have done in the past is I may approve the payment of rent and or certain recurring monthly costs up front, and some costs may be approved in advance – retaining the services of an expert in some situations, for example, but always on noticed motion. Receiver’s fees and most costs may only be paid after a noticed motion to the court. Q: Do you require that all receivers post a bond? By regulatory receivers? A: Yes, a bond must be posted by all receivers. Regulatory receivers as well. Q: Do you expect (a) the receiver or (b) the party that obtained appointment of the receiver to initiate contempt proceedings where the receivership estate is interfered with or named parties are not complying with the court’s receivership order? A: I prefer that the receiver initiate any action for contempt proceed-ings where the receivership estate is interfered with, to bring the matter before the court. This avoids a situation where one side may use such an allegation or the receiver as a tool to gain a tactical advantage. I prefer that the receiver brings such a situation to the court’s attention. Q: Is the relationship between the court and a receiver appointed pursuant to a lender’s contract rights (to protect its income stream and collateral pending foreclosure) different than the court’s relationship with a receiver appointed for other, equitable reasons? Does one type of receiver have more latitude of action than the other? A: Yes. Again I’ll draw upon my state court experience. Usually a receiver is appointed in state court where there is an apartment house and the court must deal with issues of withheld rent and purposeful waste. There are lots of housing codes and housing law liabilities where the lender or the owner could be held accountable. I always appoint a receiver under those circumstances. Q: What are your views on receiver liability? It appears generally accepted that a receiver has personal exposure for his or her deliberate tortuous conduct. But does the receiver enjoy quasi-judicial immunity for merely negligent actions undertaken within the bounds of the appointing order (leaving only the receivership estate liable) in your view? A: In state court, a person cannot sue the receiver without asking permission of the appointing court to do so. In federal court you can sue the receiver without obtaining permission. Any receiver who puts his hand in the pot or engages in tortious conduct will be sued and has personal liability. Every receiver should have both a posted bond and an errors and omissions insurance policy. Where a receiver is negligent, that receiver has personal liability to any injured parties. I believe that a receiver has personal liability for negligent conduct. Q: If suit is brought against a receiver you have appointed, do you favor transfer or removal of that action to your court for adjudication? A: Yes, I do. I’m in a better position than another judge to know how the estate was administered, and in a better position to evaluate the receiver’s actions. |
(The role and responsibilities of receivers and receiverships in federal
and state court is the subject of this issue’s Q & A exchange with the
Honorable Dickran M. Tevrizian, Jr., Judge, United States District Court,
Central District of California. Judge Tevrizian is eminently well
qualified to address this topic, having served as a judge in both Los
Angeles County Municipal Court and Superior Court before being elevated to
the Federal bench. A short biographical sketch of Judge Tevrizian precedes
the interview.)