Opinion
F077369
06-30-2020
MISSION BANK, Plaintiff and Respondent, v. RAVINDRA KUMAR KUSHWAHA et al., Defendants; JOHN MANDERFELD et al., Claimants and Appellants.
Stephen A. Fraser for Claimants and Appellants. Buchalter, Robert M. Dato and Richard P. Ormond for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 16-101325)
OPINION
APPEAL from an order of the Superior Court of Kern County. Linda S. Etienne, Temporary Judge. Stephen A. Fraser for Claimants and Appellants. Buchalter, Robert M. Dato and Richard P. Ormond for Plaintiff and Respondent.
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John Manderfeld, a court-appointed receiver, and his management company, Marin Management, Inc. (together Manderfeld or the receiver) appeal from the trial court's order denying Manderfeld's motion for (i) payment of fees as compensation for his services, (ii) reimbursement of certain receivership expenses and (iii) employment of an attorney, all of which were purportedly related to Manderfeld's four-month period as receiver of a hotel property known as the Rose Garden Inn & Suites in Ridgecrest, California (the hotel property). Manderfeld's appointment as receiver of the hotel property came at the request of Mission Bank, respondent herein, but Mission Bank quickly became dissatisfied with Manderfeld and asked the trial court to replace him with a new receiver, which was done. Nearly a year later, after the new receiver had completed his duties and sought to be discharged, Manderfeld interposed his belated motion for a portion of his fees, remaining expenses, and employment of an attorney. The trial court denied the motion, in part due to its untimeliness and other violations of the original appointment order, and Manderfeld has appealed from that denial. Having reviewed the record and considered the parties' arguments in light of relevant legal standards, we conclude that Manderfeld has failed to meet his burden of establishing a clear abuse of discretion by the trial court. Accordingly, the judgment of the trial court is affirmed.
FACTS AND PROCEDURAL HISTORY
Hotel Owners' Default Leads to Receivership
In 2008, Mojave Desert Bank extended a loan to Ravindra Kumar Kushwaha and Amanda Sue Kushwaha for $1.25 million. The loan was memorialized in a promissory note and was secured by a deed of trust in favor of Mojave Desert Bank on a two-story hotel building owned by the Kushwahas in Ridgecrest, California; namely, the Rose Garden Inn & Suites. In executing the deed of trust, the Kushwahas consented to the appointment of a receiver in the event of a default.
In 2013, Mission Bank acquired the assets of Mojave Desert Bank, including the note and deed of trust executed by the Kushwahas. In 2015, in response to the material default by the Kushwahas on the note, Mission Bank filed and recorded a notice of default and election to seek foreclosure under the deed of trust. In June 2016, Mission Bank filed their complaint in the trial court for judicial foreclosure of the deed of trust and other remedies, including the appointment of a receiver. Specifically, Mission Bank's complaint requested the trial court appoint a receiver to take possession of the hotel property and to manage and operate the same, including the collection of rents, issues and profits therefrom.
The Trial Court Appoints Manderfeld as Receiver
One week after the complaint was filed, Mission Bank moved for the immediate appointment of a receiver. The ex parte request asserted that the Kushwahas were experiencing a liquidity crisis, rendering them unable to maintain and manage the hotel, and they were not using revenue from the room rentals to satisfy their loan obligations. Further, police records reflected that law enforcement had been called to the hotel on several occasions to investigate reports of disturbances and criminal activity on the premises.
Mission Bank's motion specifically sought the appointment of John Manderfeld as receiver of the hotel property.
In its order of June 21, 2016, the trial court granted the unopposed motion. Pursuant to the trial court's order, Manderfeld was appointed as the receiver, he was required to file a bond of $10,000, and his compensation or fees for services as receiver were not to exceed $4,000 per month plus an additional $4,000 as a one-time start-up fee and a $4,000 wrap-up fee. As receiver, Manderfeld was authorized and required to take possession of, manage, and operate the hotel property. The order permitted Manderfeld to employ his own management company, Marin Management, Inc., but the management company's fees were included in the receiver's fees. Further, under the express terms of the trial court's order, Manderfeld was required to provide monthly accounting reports to the parties, which reports were to show income and expenses incurred in the administration of the receivership property, including the receiver's fees and expenses. Finally, the order clearly stated that court permission was necessary for the receiver to employ an attorney.
In July 2016, Mission Bank moved for an order to allow Manderfeld to immediately evict all persons residing at the hotel based on alleged waste, criminal activity, vandalism, and other health and safety concerns. Eviction was allegedly necessary to secure, clean up and restore the property. The trial court granted the application, but the order was qualified: Evictions of the hotel tenants could be pursued by Manderfeld as receiver, but only "upon proper notice and as may be permitted by applicable law ...."
Application to Appoint New Receiver Granted
On September 14, 2016, Mission Bank filed an application for an order substituting John Rey as receiver in place of Manderfeld. Before the application was heard, Manderfeld informed Mission Bank that he had no objection to the substitution. The ground for the application was that serious health and safety issues, unsanitary conditions, pests and vermin, along with criminal activity, had persisted at the hotel property. Although a major part of the problem was that a number of tenants had refused to leave and their continued holdout was precluding the necessary clean up and repair of the property, Mission Bank also believed that the receiver had not been prepared to deal with the extreme circumstances presented. Therefore, Mission Bank asked the trial court to substitute John Rey as receiver in place of Manderfeld. As set forth in Mission Bank's application to the court: "[I]n light of the increasing health and safety issues at the Property, the replacement of Mr. Manderfeld with a different person to act as receiver who specializes in particularly distressed assets has become necessary. The present Receiver is a hotel specialist, but does not have the knowledge to deal with the type of threats that the Property is currently facing."
On October 13, 2016, the trial court issued an order substituting John Rey as receiver, effective at 5:00 p.m., on October 21, 2016. As of that effective date and time, Manderfeld was discharged as receiver. Thus, Manderfeld's period as receiver ran from June 21, 2016 to October 21, 2016. We note there was a misstatement in the wording of the October 13, 2016 order where it stated Manderfeld's "final report and accounting is hereby approved" even though Manderfeld had not submitted such a document. In that regard, the order stated: "Mr. Manderfeld's final report and accounting is hereby approved, his rates are approved, and all outstanding invoices, costs and expenses of the receivership shall be assumed by the new receiver, Mr. Rey."
In December 2016, Mission Bank transferred its interest in the underlying loan and hotel property to Kherva, LLC. In so doing, Mission Bank assertedly retained its interest in the first priority lien on the receivership estate relating to the advances funded by Mission Bank on behalf of the receivership estate. Later that month, Kherva, LLC foreclosed on the hotel property, thereby rendering further services by Rey unnecessary and divesting him and the court of the receivership asset. Rey filed his final report and account on January 30, 2017.
Manderfeld Subsequently Claims Entitlement to Fees, Expenses and to an Attorney
In August 2017, Mission Bank filed a motion for an order approving Rey's final account and report and discharging Rey as receiver. In September 2017, Manderfeld filed his opposition to the motion. In his opposition, Manderfeld argued that Mission Bank had interfered with his receivership, including by cutting off funding and leaving Manderfeld to cover essential expenses for several weeks. Manderfeld objected to the distribution of any remaining receivership funds until his claim of entitlement to certain fees and to reimbursement of expenses was resolved.
On September 19, 2017, Manderfeld filed a separate motion to employ attorney Fraser to represent him in matters relating to his former receivership. In the motion, Manderfeld stated the reasons for which attorney services were allegedly needed by him relating to his services as the former receiver, including (i) to defend a tenant lawsuit recently served against him concerning his actions as receiver, (ii) to provide assistance in obtaining approval from the trial court of his forthcoming final account and report as receiver, and (iii) to litigate his claimed entitlement to expenses and fees arising from his tenure as receiver.
On October 16, 2017, one year after being replaced as receiver, Manderfeld filed a motion for approval by the trial court of his "final account and report," which had finally been prepared and filed, as well as for approval of nearly $34,000 in claimed receivership expenses and compensation for which he sought payment. The reason given by Manderfeld for failure to submit his final account and report to the court at an earlier date was that Mission Bank allegedly had failed to provide needed account data to complete the report. Manderfeld also requested an order disqualifying Mission Bank's counsel, Richard Ormond, due to a purported conflict of interest from alleged joint representation of Mission Bank and Manderfeld. Lastly, Manderfeld requested the trial court set an evidentiary hearing allowing oral testimony on contested issues such as the claimed receivership expenses and compensation.
Mission Bank opposed the above relief sought by Manderfeld, including the request for payment of expenses and to employ an attorney. Mission Bank characterized Manderfeld's request for expenses as seeking to be paid back for his company's own internal operating expenses, which assertedly was not permitted since authorization from the court had not been obtained to recover such expenses. Furthermore, Mission Bank argued the requests for payment of expenses or compensation should have been made to the trial court at the time of his discharge as receiver, back in October 2016, when Rey was being substituted in as the new receiver. In other words, Mission Bank urged the trial court to deny Manderfeld's requests because they were not timely or diligently pursued.
Mission Bank also challenged Manderfeld's assertion that Mission Bank had not provided him with bank records to prepare his final accounting until September 2017. One of Mission Bank's attorneys, Audrey Olson, stated in her declaration that, in December 2016, when she urged Manderfeld to provide a final accounting and report to Mission Bank, "Manderfeld informed me over the telephone that a final accounting and report was not a high priority." Further, according to Olson, Manderfeld said he would consider providing a final accounting and report if Mission Bank "paid him to prepare the document" and added that "[h]e was also prepared to litigate the issue."
Trial Court's Order Denying Manderfeld's Motions
The trial court heard Manderfeld's motions on March 1, 2018. After allowing oral argument, the trial court announced its ruling from the bench to deny Manderfeld's motions, with the understanding that a written order would follow. During the portion of the hearing when the trial court was discussing Manderfeld's motion to employ an attorney, the trial court noted the request by Manderfeld (and other relief sought by him) should have been made earlier, prior to his discharge as receiver. The trial court then told Manderfeld: "Mr. Manderfeld, I certainly think it would have been prudent and advisable for you to have sought the appointment of counsel at the commencement of the receivership, [which] is something I have been told by a receiver with whom I am familiar with, is Receivership 101."
By written order of April 16, 2018, the trial court formally denied each of Manderfeld's motions that are at issue in the present appeal. Manderfeld's motion to employ an attorney was denied on the grounds that he failed to comply with California Rules of Court, rule 3.1180 and the trial court's appointment order dated June 21, 2016. Similarly, Manderfeld's request for an award of receivership expenses and fees was denied for failure to comply with the trial court's appointment order dated June 21, 2016, and because the requested reimbursements were not shown to be related to the operation or management of the receivership estate. Additionally, Manderfeld's requests for an order disqualifying opposing counsel and to expand the evidentiary hearing to allow oral testimony were both denied.
Manderfeld's Appeal
Manderfeld appeals from the trial court's order, primarily contending the trial court abused its discretion in its denial of (i) the motion to employ an attorney, and (ii) the motion for recovery of Manderfeld's expenses and compensation/fees relating to his term as receiver. As to the motion to employ an attorney, Manderfeld also argues the trial court improperly consulted, outside of the courtroom, an individual expert on receiverships, which ex parte inquiry by the trial court was allegedly evidenced by comments made by the trial court during oral argument.
Although the notice of appeal was filed days before the trial court's written order was issued, we treat the premature notice of appeal as from the trial court's order. (See Cal. Rules of Court, rule 8.104(d).)
In connection with the present appeal, Manderfeld has filed two requests for judicial notice. The first, filed on July 11, 2018, requested judicial notice of certain pleadings, orders or other court records in the tenants' lawsuit filed against him. We grant the request (see Evid. Code, § 452, subd. (d)), but only as to the particular documents that were before the trial court in the present case; that is, items No. 1, 10 and 12 of the request. (See MMM Holdings, Inc. v. Reich (2018) 21 Cal.App.5th 167, 187.) The second request for judicial notice by Manderfeld was filed on October 5, 2018, and sought notice of the canons of judicial conduct set forth in the California Code of Judicial Ethics, as adopted by the California Supreme Court. That request is granted.
DISCUSSION
I. Nature of Receivership and Standard of Review
A receiver is an agent and officer of the court and is under the control and supervision of the court. (Code Civ. Proc., § 568; Cal. Rules of Court, rule 3.1179; Southern California Sunbelt Developers, Inc. v. Banyan Limited Partnership (2017) 8 Cal.App.5th 910, 922 (Southern Cal. Sunbelt).) "The function of the receiver is to aid the court in preserving and managing the property involved in a particular lawsuit for the benefit of those to whom it can ultimately be determined to belong." (City of Sierra Madre v. SunTrust Mortgage, Inc. (2019) 32 Cal.App.5th 648, 656.) In carrying out that function, a receiver only has those powers granted to it by statute or an order of the court. (Ibid.) As one treatise explains: "A receiver is a court officer or representative appointed to take over the control and management of property that is the subject of litigation before the court, to preserve the property, and ultimately to dispose of it according to the final judgment." (6 Witkin, Cal. Procedure (5th ed. 2008) Provisional Remedies, § 419.) A receiver is not an agent of any party to the action, but instead is a fiduciary who, as an officer and representative of the court, acts for the benefit of all persons interested in the property. (Shannon v. Superior Court (1990) 217 Cal.App.3d 986, 992.)
Receivers are ordinarily entitled to compensation for their own services and the services performed by their attorneys. (Southern Cal. Sunbelt, supra, 8 Cal.App.5th at p. 922.) Generally, the costs of a receivership are paid from the property in the receivership estate. (Ibid.; Andrade v. Andrade (1932) 216 Cal. 108, 110 [costs or expenses of receivership are generally a charge upon the property in the receiver's possession and paid out of said property].) However, the court may also impose the receiver costs on the party who sought the appointment of a receiver, or apportion such costs among the parties, depending on the circumstances. (City of Chula Vista v. Gutierrez (2012) 207 Cal.App.4th 681, 685-686.) The amount of fees or compensation to be awarded to a receiver is a matter within the sound discretion of the trial court, and in the absence of a clear showing of abuse of discretion, such a determination will not be disturbed on appeal. (Melikian v. Aquila, Ltd. (1998) 63 Cal.App.4th 1364, 1368; People v. Riverside University (1973) 35 Cal.App.3d 572, 587).
The matters challenged in the present appeal largely relate to the trial court's determinations of whether to allow the former receiver, Manderfeld, to be paid certain compensation, fees or expenses, and to employ an attorney regarding receivership actions. Consistent with the principles outlined above, we review such issues under the abuse of discretion standard of review. (See City of Sierra Madre v. SunTrust Mortgage, Inc., supra, 32 Cal.App.5th at p. 657 ["Most matters related to receiverships rest in the sound discretion of the trial court" including compensation issues].) Furthermore, court rulings on receivership matters are typically afforded "considerable deference on review." (City of Santa Monica v. Gonzalez (2008) 43 Cal.4th 905, 931.) "The proper exercise of discretion requires the court to consider all material facts and evidence and to apply legal principles essential to an informed, intelligent and just decision. [Citation.] Our view of the facts must be in the light most favorable to the order ...." (Cal-American Income Property Fund VII v. Brown Development Corp. (1982) 138 Cal.App.3d 268, 274.)
Although most of the issues before us involve the deferential abuse of discretion standard of review, to the extent that a discrete question of law is properly raised, we apply de novo review to such question. Manderfeld argues, based on undisputed facts revealed in the record, that judicial misconduct occurred during the hearing and reflected the trial court was not impartial. We undertake independent review of that legal issue. (Wechsler v. Superior Court (2014) 224 Cal.App.4th 384, 391-392; Briggs v. Superior Court (2001) 87 Cal.App.4th 312, 319; see also Haworth v. Superior Court (2010) 50 Cal.4th 372, 383, fn. 8 [holding independent standard of review applies to arbitrator's appearance of bias].)
II. Manderfeld's Motion for Fees and Expenses Was Properly Denied
In the proceedings before the trial court, Manderfeld moved for (i) an award of fees allegedly due to him as compensation for his services as receiver, and (ii) the payment of certain expenses advanced by Manderfeld to pay bills or costs incurred to continue the operation of the hotel property during the final weeks of Manderfeld's receivership thereof. As to the requested fees, Manderfeld claimed he was not paid the entire amount of the compensation specified in the June 21, 2016 appointment order, whereby he was entitled to a fee of up to $4,000 per month plus a "wrap-up" fee of $4,000. Of the total fee amounts authorized in the order, Manderfeld claims that $7,000 was still owing. As to the requested expenses, Manderfeld asserted that Mission Bank, on September 27, 2016, cut off the receiver (i.e., Manderfeld) from further use of the receivership bank account, even though Manderfeld's services as receiver continued until 5:00 p.m. on October 21, 2016, and necessary expenses of the receivership were still continuing to accrue and had to be paid. The amount of expenses advanced by Manderfeld and for which reimbursement was initially sought was over $30,000, but was later adjusted to $21,798.81, which sum allegedly included such items as wages for front desk and maintenance staff, accounting fees, workers' compensation premiums, health insurance and housing for the on-site general manager.
Manderfeld's motion for an award of fees and expenses was denied by the trial court. The explanation given by the trial court in its written order was as follows: "Manderfeld's request for award of compensation, including expenses and fees is denied for failing to timely comply with this court's appointment order dated June 21, 2016 and as reimbursements [were] not related to the operation or management of the receivership estate." In the instant appeal, Manderfeld argues the trial court's decision to deny such expenses and fees constituted an abuse of discretion. According to Manderfeld's opening brief: "The court's powers, albeit most broad, are not unlimited; there must be a certain factual warrant to forfeit the receiver's fees of $7,000 and to surcharge him with $21,789.98 in hotel expenses...."
As we have noted, receivers are generally entitled to compensation for their own services, and further, the costs of the receivership are typically paid out of the property in the receivership estate or, in some cases, by the party requesting the receiver or allocation among the parties. (Southern Cal. Sunbelt, supra, 8 Cal.App.5th at p. 922; City of Chula Vista v. Gutierrez, supra, 207 Cal.App.4th 681, 685-686; Andrade v. Andrade, supra, 216 Cal. at p. 110 [costs or expenses of receivership are generally a charge upon the property in the receiver's possession and paid out of said property].) Matters of fees and expenses are within the sound discretion of the trial court, and in the absence of a clear showing of abuse of discretion, will not be disturbed on appeal. (See City of Chula Vista v. Gutierrez, supra, 207 Cal.App.4th 681, 685-686; People v. Riverside University, supra, 35 Cal.App.3d at p. 587.) The question here is whether the trial court's denial of the request for payment of the alleged fees and expenses was within the court's sound discretion under all the circumstances of this case. We conclude that it was. As we proceed to explain, no abuse of discretion was shown because, as the trial court found and the record substantiated, Manderfeld failed to timely comply with key provisions of the trial court's order appointing him as receiver.
A receiver only has those powers granted to him by statute or an order of the court. (City of Sierra Madre v. SunTrust Mortgage, Inc., supra, 32 Cal.App.5th at p. 656.) Here, the primary ground for the trial court's denial of Manderfeld's motion to recover fees and expenses was Manderfeld's "fail[ure] to timely comply with this court's appointment order dated June 21, 2016." Although the trial court's written order did not elaborate further, the reference to a failure of "timely" compliance reflects that the court found Manderfeld's requests for further fees and expenses were untimely under one or more provisions of the trial court's June 21, 2016 appointment order (the appointment order). As explained below, the record adequately supports that finding.
Among other timing requirements, the appointment order stated in paragraph 15(a) the receiver must "each month" prepare and serve on the parties "an accounting of the income and expenses incurred in the administration of the receivership property, including the receiver's fees and expenses." (Italics added.) (Accord, Cal. Rules of Court, rule 3.1182 [monthly reports required, including statement of fees and expenses].) In opposing Manderfeld's motion, Mission Bank presented substantial evidence in the form of a declaration of Richard Ormond, the attorney handling the receivership issues for Mission Bank, that Manderfeld never submitted the required monthly reports for the four months he was receiver of the hotel property. Manderfeld's appeal has not materially disputed this or shown a factual basis in the record to indicate otherwise. At most, Manderfeld has shown that his management firm did occasionally provide some expense data and e-mail summaries of bills that needed to be paid, but the trial court was entitled to conclude, and implicitly did conclude, that this was not an adequate substitute for a more detailed monthly accounting of the income and expenses, including the receiver's fees and expenses. According to Ormond, without such monthly reports, there was no timely, regular or adequate information being provided to Mission Bank, as the party funding the receivership, of the expenses and fees allegedly being incurred by Manderfeld. We hold the record sufficiently supports the conclusion that Manderfeld failed to provide monthly reports and that such omissions amounted to a material failure to timely comply with the terms of the appointment order.
Also, an incomplete half-page interim report was provided by Jeffrey Swanson, a supervisor employed by Manderfeld's management company, which report was provided to Mission Bank and/or to the court on September 19, 2016, shortly before the date of the hearing to remove and discharge Manderfeld and to appoint a new receiver.
As reported by attorney Ormond, at the hearing at which Manderfeld was replaced, the trial court expressed concern that Manderfeld had neither filed monthly reports nor made any appearance to explain the status of the receivership. --------
Furthermore, paragraph 24(b) of the appointment order mandated as follows: "Not later than 60 days after the receivership terminates, the receiver shall file [and] serve ... a motion for discharge and approval of the final report and account." (Italics added.) Such a motion would be expected to include, along with an accounting summary, any remaining request for fees or expenses. (Appointment order, ¶¶ 24(d), 15(b).) As the term is used in the appointment order, a receivership would be deemed to terminate by the occurrence of an event such as a foreclosure of the receivership property (see appointment order, ¶ 24(d)(1); cf. ¶ 23), presumably because that type of event would render further services by the receiver unnecessary and/or divest the court of the original receivership asset. Moreover, we agree with Mission Bank's position that this same wording in paragraph 24(b) is also broad enough to reasonably include the discharge of a receiver upon his or her removal, since by virtue of that event his or her official capacity as the receiver would have been terminated. In such an instance, the 60-day time deadline would reasonably be triggered to accomplish paragraph 24(b)'s evident purpose of requiring prompt submittal of the final account and report. (See also Cal. Rules of Court, rule 3.1184(a) [receiver's duty to present final account and report].)
Here, Manderfeld's official status as receiver terminated in October 2016 when he was removed and discharged. This event was sufficient to trigger Manderfeld's duty to promptly submit a final account and report for the court's approval. Based on the terms and provisions of the appointment order discussed above, we conclude Manderfeld had 60 days after his removal and discharge to file and serve a motion for approval of his final account and report, including any request for recovery of additional expenses or fees. He did not file such a motion until September 2017, which was long after the timing requirements contained in paragraph 24(b) of the appointment order had expired.
Manderfeld's failure to timely prepare a final account and report was despite numerous requests from Mission Bank that he do so. As shown by the declaration of attorney Richard Ormond, with attached copies of e-mails, throughout the period between October to December of 2016, Manderfeld was repeatedly urged to provide his final account and report, but he failed to do so. Moreover, although in support of his motion for fees and expenses Manderfeld claimed that Mission Bank had not timely provided him with needed information to prepare his final account and report, we observe there was substantial evidence in the record to support a contrary inference. Specifically, the declaration of one of Mission Bank's other attorneys, Audrey Olson, averred as follows: "In December 2016, ... I requested that the Former Receiver John Manderfeld ... supply to Mission Bank a final accounting and report. After some back and forth over the issue, on December 19, 2016, Manderfeld informed me over the telephone that a final accounting and report was not a high priority.... Manderfeld further informed me that he would consider providing a final accounting and report if Mission Bank paid him to prepare the document. He was also prepared to litigate the issue." Thus, the response given by Manderfeld at that time did not indicate a lack of information was the obstacle, but rather, a lack of priority or interest on his part. At least, the trial court could reasonably draw such an inference, and it appears the court implicitly did so.
As the foregoing discussion indicates, the record supported the trial court's finding that Manderfeld failed to timely comply with key provisions of the court's appointment order. Not only did Manderfeld fail to provide the monthly accounting reports as required, including as to fees and expenses, but he also failed to prepare and serve a final account and report within the time limits set forth in the appointment order—instead waiting nearly a year after his removal and discharge to present a final account and report along with his belated fee and expense requests. Manderfeld's substantial noncompliance with the express terms of the appointment order clearly furnished adequate grounds for the trial court's decision to deny the belatedly sought fees and expenses. It hardly needs to be said that the regular and timely provision by a receiver of necessary and detailed accounting information, including a final account and report within the required time parameters, are essential to the proper and efficient functioning of a receivership. The timing and reporting provisions at issue served these important purposes and their disregard may appropriately be taken seriously by the court. But even apart from the appointment order, Manderfeld's unreasonably long delay of nearly a year after his discharge in claiming the allegedly unpaid fees and expenses, after also having failed to provide monthly accounting reports and after having repeatedly rebuffed Mission Bank's requests in the fall of 2016 that he provide a final account and report at that time, were sufficient circumstances to support the trial court's denial.
Based on all of the foregoing considerations, we conclude the trial court did not abuse its broad discretion when, on the record and circumstances before it, the court denied Manderfeld's motion for recovery of additional fees and expenses allegedly stemming from his receivership of the hotel property. (See Melikian v. Aquila, Ltd., supra, 63 Cal.App.4th 1364, 1368 [trial court's order relating to receiver's fees or costs will only be disturbed on appeal where the court's discretion has been clearly abused]; City of Santa Monica v. Gonzalez, supra, 43 Cal.4th 905, 931 [court rulings on receivership matters are typically afforded "considerable deference on review"].)
We note that as a secondary ground for denying Manderfeld's request for payment of the claimed expenses, the trial court stated the requested "reimbursements [were] not related to the operation or management of the receivership estate." In that regard, the trial court was apparently considering a provision in the appointment order indicating that, in the absence of court approval, the receiver will not be reimbursed "for the receiver's general office administration expenses or overhead ..." including for example "office supplies and employee payroll, benefits, and taxes." The appointment order had further specified that while the receiver may employ Marin Management, Inc. as a management company, the management company's fees were not additional expenses but were included in Manderfeld's fees. We find it is entirely unnecessary to address these secondary grounds indicated by the trial court because, as discussed hereinabove, there were other solid grounds for denial of the motion for expenses and fees which provide a sufficient basis to conclude the trial court did not abuse its discretion. For the same reason, it is likewise unnecessary to the disposition of this appeal for this court to sift through various expense items to discern whether a portion of the expense requests may have been sufficiently related to the receivership property to be otherwise potentially reimbursable.
III. Manderfeld's Motion to Employ Attorney Was Properly Denied
As noted, Manderfeld was receiver from June 21, 2016 to October 21, 2016. In September of 2017, almost a year after being replaced and discharged as receiver, Manderfeld filed a motion seeking the approval of the trial court to employ and compensate an attorney, Stephen Fraser, to represent Manderfeld as former receiver. The trial court denied the motion because Manderfeld did not timely comply with California Rules of Court, rule 3.1180 (rule 3.1180) or with the court's appointment order. Rule 3.1180 provides as follows: "A receiver must not employ an attorney without the approval of the court. The application for approval to employ an attorney must be in writing and must state: [¶] (1) The necessity for the employment; [¶] (2) The name of the attorney whom the receiver proposes to employ; and [¶] (3) That the attorney is not the attorney for, associated with, nor employed by an attorney for any party." The appointment order has a similar approval requirement, stating as follows: "[B]efore employing counsel the receiver shall apply to the court for an order authorizing the receiver to employ counsel." At the hearing, the trial court made further comments to the effect that Manderfeld should have requested the court's permission to employ an attorney at or near the outset of the receivership, as is ordinarily done, or at least prior to discharge.
Manderfeld contends the trial court's denial of his request to employ an attorney to represent him as the former receiver was an abuse of discretion, regardless of when the motion was brought. Manderfeld points out that, in circumstances requiring immediate action, a receiver may employ counsel without prior approval of the court and the court would have discretion to ratify the employment of counsel afterwards. As explained in Maggiora v. Palo Alto Inn, Inc. (1967) 249 Cal.App.2d 706, 713: "This rule is one of common sense, necessitated by the fact that often ... a receiver is required to act in an emergency where no prior approval is possible." (Id. at p. 713; accord, People v. Riverside University, supra, 35 Cal.App.3d 572, 582.) At the hearing, the trial court expressed its familiarity with such considerations, but ultimately denied Manderfeld's motion in any event.
We note that, in seeking to explain any delay in his request to employ an attorney, Manderfeld asserted in the trial court that Mission Bank's attorney, Ormond, was apparently representing Manderfeld, as receiver, as well as representing Mission Bank. However, there was substantial evidence in the record that Manderfeld understood attorney Ormond only represented Mission Bank, and the trial court flatly rejected the dual representation claim. Manderfeld has not specifically challenged that aspect of the trial court's order. Furthermore, since rule 3.1180, clearly prohibits an attorney for one of the parties from serving as the attorney for the receiver, it is unlikely that an experienced receiver would reasonably have expected the bank's attorney to be also representing the receiver, even if—as arguably occurred here—the bank's and receiver's interests in the receivership proceedings coincided at times and there was significant cooperation. In short, the dual representation claim does not assist Manderfeld in this appeal.
The position taken by Mission Bank is that the denial of the motion to employ an attorney was within the trial court's broad discretion because, not only was the court's approval not sought by Manderfeld until well after engaging his attorney, but Manderfeld waited nearly one year from the time he was replaced as receiver to seek approval to employ an attorney even though the necessity to do so had become reasonably apparent while he was still serving as receiver. We agree with that assessment. Our review of the record indicates there is substantial support for the following chronology of the underlying events. By September-October 2016, before Manderfeld was replaced as receiver, he was aware that the tenants at the hotel property were threatening to pursue a lawsuit against the hotel owners and managers, including against Manderfeld for conduct relating to the period of his tenure as the receiver. In September 2016, Mission Bank was in the process of negotiating a financial settlement with the tenants and requested that Manderfeld contribute and be part of the settlement, which could lead to Manderfeld being dropped from any suit, but Manderfeld refused because he believed he had done nothing wrong. Thus, Mission Bank, the party that was funding receivership expenses, was proposing a means to minimize and resolve any potential liability and expenses in regard to the tenants' claims; yet Manderfeld elected not to participate. Mission Bank did in fact settle with the tenants and received a release of claims; while Manderfeld did not. At about that same time, Manderfeld was also aware that Mission Bank would potentially be disputing some of his claims for fees. In light of these important legal developments, Mission Bank's attorney, Richard Ormond, urged Manderfeld in September and October 2016, and afterwards, to hire an attorney to obtain legal advice and representation as receiver concerning these matters. Despite Ormond's repeated efforts to persuade Manderfeld to take prompt action to secure an attorney for himself as receiver, and the evident need for same, Manderfeld put it off and did not do so.
The tenants' complaint naming Manderfeld among others as defendants was filed in early 2017 and was served on Manderfeld in July 2017. As noted, the tenants' legal claims had been a known concern or issue for some time, even before Manderfeld's removal as receiver. The complaint was premised in part on the worsening condition of the hotel property and the manner of handling the evictions. In July 2017, without seeking court approval, Manderfeld retained Fraser as his attorney to defend against the lawsuit. After hiring attorney Fraser for that purpose, Manderfeld subsequently decided to expand the scope of Fraser's legal services, also without court approval, to include legal advocacy in support of Manderfeld's effort to recover the allegedly unpaid fees and expenses. Having initiated Fraser's legal services in July 2017, and incurring substantial legal expenses, Manderfeld waited approximately another two months, until September 19, 2017, to file his motion to obtain the court's approval for employment of attorney Fraser to represent Manderfeld as the former receiver.
The above facts were adequately reflected in, or supported by, the record and were implicitly weighed and considered by the trial court in reaching its conclusion to deny the motion. Under all the circumstances, including the delays and conduct outlined above, we are unable to conclude the trial court manifestly abused its discretion in denying Manderfeld's belated motion as former receiver to employ an attorney. Accordingly, we conclude the trial court's decision denying the motion must be affirmed.
IV. The Trial Court Did Not Commit Judicial Misconduct
Manderfeld argues the trial court made a comment at the end of the hearing reflecting that the court had spoken with an expert consultant about receiverships outside the presence of the parties. Manderfeld claims the comment confirmed the existence of an improper ex parte communication by the trial court constituting judicial misconduct and warranting a new trial of the issues. We disagree.
In relevant part, the trial court stated: "Mr. Manderfeld, I certainly think it would have been prudent and advisable for you to have sought the appointment of counsel at the commencement of the receivership, is something I have been told by a receiver with whom I am familiar with, is Receivership 101." We disagree with Manderfeld's characterization of the trial court's remark. Based on the words and context, it appears the trial court was merely providing general guidance or stating a commonsense truism about what would have been a wise or prudent approach: namely, that any receiver (including Manderfeld) should ordinarily obtain an attorney at the earliest opportunity and indication of need—ordinarily at the beginning of the receivership. Of course, it is recognized that a court or judge may permissibly offer comments on evidence or make fair and accurate advisory remarks. (See, e.g., Clark v. Laughlin (1977) 68 Cal.App.3d 506, 513.) Furthermore, the fact that the trial court may have in the past either read or heard general commentary about receiverships, or a summary of prudent or customary practices therein, from outside legal resources or speakers, would not appear by itself to indicate any prejudicial, biased or improper conduct or attitude on the trial court's part here. In conclusion, the claim of prejudicial judicial misconduct fails.
V. The Trial Court Did Not Err in Denying Oral Testimony.
The trial court decided Manderfeld's motions based on the declarations and evidentiary exhibits submitted by the parties, in addition to the pleadings, points and authorities, and other moving and opposing papers on file. Manderfeld's motions included a request to expand the nature of the hearing to include oral testimony. The trial court denied that request because Manderfeld failed to comply with California Rules of Court, rule 3.1306 (rule 3.1306). Rule 3.1306 provides that evidence received at a law and motion hearing must be based on declarations or a request for judicial notice, "unless the court orders otherwise for good cause shown." (Rule 3.1306(a).) The rule further requires that a party seeking to introduce oral testimony "must file, no later than three court days before the hearing, a written statement stating the nature and extent of the evidence proposed to be introduced and a reasonable time estimate for the hearing." (Rule 3.1306(b).) Manderfeld failed to comply with the above requirements. Although Manderfeld's request broadly categorized several topics of proposed oral testimony, he did not specify the other required information, including the extent of the oral testimony by the witness or witnesses and an estimate of time duration of the hearing. In light of this failure to satisfy rule 3.1306, it is clear that no error or abuse of discretion has been demonstrated. (Silver v. Los Angeles County Metropolitan Transportation Authority (2000) 79 Cal.App.4th 338, 352 ["The absence of a duly filed request by petitioners to present oral testimony at the hearing" disposes of contention that the trial court erred in denying that request].) Further, it is not established by Manderfeld that, even if a proper request under rule 3.1306(b) had been made, the trial court could not have appropriately denied the request, under its broad discretion, such as on the grounds that the declarations were adequate to resolve the motions without the need for oral testimony.
In summary, we conclude that no error or abuse of discretion has been shown regarding the trial court's denial of Manderfeld's request to include oral testimony at the hearing.
DISPOSITION
The order of the trial court is affirmed. Costs on appeal are awarded to Mission Bank.
LEVY, Acting P.J. WE CONCUR: DETJEN, J. MEEHAN, J.