Opinion
H036060
01-09-2012
BAKER HUGHES, INC., Plaintiff and Appellant, v. TELECHEM INTERNATIONAL, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Clara County Super. Ct. No. CV075502)
Appellant Baker Hughes, Inc. (Baker Hughes) appeals from the superior court's order denying its motion for the appointment of a receiver to manage and operate the business of respondent TeleChem International, Inc. (TeleChem) so as to satisfy a judgment that Baker Hughes obtained in 2007 against TeleChem. Baker Hughes contends that the superior court abused its discretion in denying its motion. We disagree and affirm the superior court's order.
I. Background
In October 2007, Baker Hughes obtained a default judgment against TeleChem for $143,110.71. Baker Hughes tried to collect on the judgment, but its efforts were fruitless. In August 2009, at a debtor's examination, Baker Hughes learned that TeleChem's "monthly income and receipts is $150,000." TeleChem asserted that it had "extensive expenses." In February 2010 and again in April 2010, Baker Hughes obtained writs of execution on its judgment against TeleChem.
In May 2010, Baker Hughes learned that TeleChem had, "through a Rene Schena, renewed a consulting agreement with Mark Schena, Inc. for a minimum annual income of $250,000." Baker Hughes believed that this agreement "reflects possible nepotism and business mishandling."
In June 2010, Baker Hughes filed a motion seeking the appointment of a receiver to manage and operate TeleChem's business for the purpose of satisfying TeleChem's creditors.
In July 2010, Arrayit Corporation (Arrayit) filed opposition to Baker Hughes's motion. Arrayit argued that the appointment of a receiver would be "costly, overly aggressive, and inappropriate" because TeleChem, Arrayit's wholly-owned subsidiary, was "working to meet its commitments and financial obligations, including paying its debt to Baker Hughes." Arrayit asserted that "receivership would likely force Arrayit into insolvency."
Arrayit's opposition was supported by two exhibits: a "Form 10-K" filed by Arrayit with the United States Securities and Exchange Commission for the 2009 calendar year, and the declaration of Rene Schena. Rene Schena is the chief executive officer of Arrayit and the president of TeleChem. Arrayit was "formerly known as TeleChem . . . ." Arrayit's total assets as of December 31, 2009 amounted to just over $500,000, while it total liabilities amounted to nearly $7 million. Mark Schena is the "Chief Science Officer" of Arrayit. Rene Schena's declaration explained that the primary asset of Arrayit and its subsidiaries is a patent that cannot be utilized without the specialized knowledge of Arrayit's employees. The appointment of "a receiver to manage Arrayit" would, according to Rene Schena, "cause additional undue expense and damage" because the cost of paying the receiver would "likely" make Arrayit "go under."
At the August 17, 2010 hearing, the court denied the motion and explained the basis for its ruling. "I thought the other side's papers really slammed the door on it. The Court does not you know, doesn't routinely do this. It is very unusual. And I didn't see the circumstances here were appropriate for it. It's just that simple. I have been back over the papers a couple of times. I just don't see why it is necessary here." On September 9, 2010, the superior court entered a written order denying Baker Hughes's motion "without prejudice." Baker Hughes timely filed a notice of appeal.
II. Analysis
TeleChem challenges the appealability of the superior court's order. Postjudgment orders that follow appealable judgments are made appealable by Code of Civil Procedure section 904.1, subdivision (b). "[However,] not every postjudgment order that follows a final appealable judgment is appealable. To be appealable, a postjudgment order must satisfy two additional requirements. . . . [¶] The first requirement . . . is that the issues raised by the appeal from the order must be different from those arising from an appeal from the judgment. . . . [¶] The second requirement . . . is that 'the order must either affect the judgment or relate to it by enforcing it or staying its execution.' " (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 651-652, fn. omitted.) Here, the superior court's postjudgment order plainly followed an appealable judgment, Baker Hughes's 2007 default judgment. This order also satisfied the other two requirements. The issues raised in this appeal have nothing to do with those that might arise from an appeal from the judgment, and the order relates to enforcement of the judgment. Therefore, we reject TeleChem's claim that the order was not appealable and proceed to the merits of Baker Hughes's appeal.
Baker Hughes contends that the superior court's denial of its motion was an abuse of discretion because (1) a receiver is necessary under the circumstances, (2) the court failed to consider Baker Hughes's evidence, and (3) the court improperly relied on the opposition to the motion.
"The court may appoint a receiver to enforce the judgment where the judgment creditor shows that, considering the interests of both the judgment creditor and the judgment debtor, the appointment of a receiver is a reasonable method to obtain the fair and orderly satisfaction of the judgment." (Code Civ. Proc, § 708.620.) Hence, Baker Hughes bore the burden of proving that the appointment of a receiver was a "reasonable method" to obtain satisfaction of its judgment, and the decision as to whether to appoint a receiver lay squarely in the superior court's discretion.
"The abuse of discretion standard is not a unified standard; the deference it calls for varies according to the aspect of a trial court's ruling under review. The trial court's findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed de novo, and its application of the law to the facts is reversible only if arbitrary and capricious." (Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 711-712, fns. omitted.)
Here, the superior court's implied factual findings are supported by substantial evidence. Baker Hughes's showing amounted to little more than a demonstration that the methods it had utilized to collect on the judgment during the preceding three years had been unsuccessful. Since TeleChem was now operating as Arrayit, and Mark Schena was its chief science officer, TeleChem/Arrayit's contract with Mark Schena did not appear to be tainted by any suggestion of nepotism. The amount of TeleChem's monthly revenues did not reflect that it had funds available to satisfy Baker Hughes's judgment as the company was operating with enormous liabilities and very little capital. Baker Hughes's judgment was but a small part of the nearly $7 million in liabilities with which Arrayit was burdened. The superior court was entitled to credit Rene Schena's assertion that the appointment of a receiver would drive Arrayit into insolvency, a situation that would have frustrated Arrayit's other substantial creditors. Since substantial evidence supports the superior court's implied factual findings, the superior court's decision that it would be unreasonable to appoint a receiver was neither arbitrary nor capricious.
We find no merit in Baker Hughes's claim that the superior court failed to consider its evidence. "A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown." (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) "Absent an indication in the record that an error occurred, we must presume that there was no error." (Bullock v. Philip Morris USA, Inc. (2008) 159 Cal.App.4th 655, 678.)
Baker Hughes claims that "[i]t is apparent that the Court did not appropriately consider all of Baker Hughes'[s] evidence of record" because, "[if] it had, the only reasonable result would have been a ruling in Baker Hughes'[s] favor on the Motion." This argument finds no support whatsoever in the record. Indeed, the superior court explicitly stated that it had "been back over the papers a couple of times" and could not find any basis for granting the motion. That the court rejected Baker Hughes's motion does not demonstrate the court did not consider Baker Hughes's evidence but that it did not credit that evidence as being sufficient to justify the appointment of a receiver.
In its reply brief, Baker Hughes contends that the court's reference to "the papers" meant that the court had failed to consider "the evidence before the Court on the Motion . . . ." Baker Hughes argues that its motion "was additionally based on the 'records and files herein,' " which included "evidence" that was not in the "papers" considered by the court. Baker Hughes has not overcome the presumption that the court properly considered the relevant evidence. Although Baker Hughes claims that "the papers" referred to only the pleadings, we must presume that the court used that term to refer to all of the documentary evidence that was properly before it on the motion. We note that Baker Hughes's pleadings did not explicitly refer to any specific documents in the court's file, which suggests that the merits of its motion did not depend on any such documents.
On appeal, Baker Hughes relies on several documents in the court's file evidencing the specific nature of its collection efforts. Since Baker Hughes's motion was supported by a declaration generally describing its collection efforts, these documents in the court's file were not critical to the merits of the motion.
Finally, Baker Hughes maintains that the superior court abused its discretion because it "heavily relied on TeleChem's 'papers' " in denying Baker Hughes's motion. Baker Hughes asserts that the opposition "papers" were "not relevant" because they concerned "prejudice that only Arrayit would suffer." Because the judgment was against TeleChem and the motion was to appoint a receiver for TeleChem, Baker Hughes contends that prejudice to Arrayit was "not relevant and material to the Motion." Baker Hughes insists that "TeleChem and Arrayit are entirely separate entities, and for purposes of the Motion, Arrayit is a non-party."
It was a question of fact for the superior court to resolve whether Arrayit and TeleChem "are entirely separate entities," and we must uphold the superior court's implied factual finding if it is supported by substantial evidence. We find that it is. Arrayit submitted evidence that TeleChem is its wholly-owned subsidiary and that TeleChem is now known as Arrayit. Under these circumstances, the superior court could properly consider the impact that Arrayit would suffer from the appointment of a receiver to manage the business of Arrayit/TeleChem.
The superior court did not abuse its discretion in denying without prejudice Baker Hughes's motion for appointment of a receiver.
III. Disposition
The order is affirmed.
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Mihara, J.
WE CONCUR:
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Elia, Acting P. J.
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Judge of the Santa Clara County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
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