-RZ Santa Barbara Chan, et al v. David Seror, No. 2:2001cv00456 - Document 436 (C.D. Cal. 2010)
Court Description: FINDINGS OF FACT AND CONCLUSIONS OF LAW; ORDER GRANTINGPLAINTIFFS APPLICATION FOR APPOINTMENT OF RECEIVER signed by Judge George H Wu. (pj)
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-RZ Santa Barbara Chan, et al v. David Seror 1 2 3 4 Doc. 436 Daniel Cooper (Bar No. 153576) EMAIL: Daniel@lawyersforcleanwater.com LAWYERS FOR CLEAN WATER, INC. 1004A O’Reilly Avenue San Francisco, California 94129 Telephone: (415) 440-6520 Fax: (415) 440-4155 5 6 7 8 9 10 Linda Krop (Bar No. 118773) EMAIL: lkrop@edcnet.org ENVIRONMENTAL DEFENSE CENTER 906 Garden Street Santa Barbara, CA 93101 PH: (805) 963-1622 FAX: (805) 962-3152 11 Attorneys for Plaintiff SANTA BARBARA CHANNELKEEPER and ENVIRONMENTAL DEFENSE CENTER 12 Additional Plaintiffs’ counsel on next page 13 UNITED STATES DISTRICT COURT 14 CENTRAL DISTRICT OF CALIFORNIA 15 WESTERN DIVISION – LOS ANGELES 16 17 18 19 20 21 22 23 24 ) Case No.: CV 01-00456 GW (RZx) SANTA BARBARA CHANNELKEEPER, a California non- ) ) Hon. George H. Wu profit corporation, and ) ENVIRONMENTAL DEFENSE ) FINDINGS OF FACT AND CENTER, a California non-profit ) CONCLUSIONS OF LAW; corporation, ) ) Plaintiffs, ) ORDER GRANTING ) PLAINTIFFS’ APPLICATION v. ) FOR APPOINTMENT OF ) RECEIVER DAVID SEROR, Solely in His ) Capacity as Chapter 7 Trustee of ) Halaco Engineering Co., et al., ) Status Conference: October 14, 2010 ) Time: 8:30 a.m. Defendants. ) Courtroom: 10 25 26 27 i [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) Dockets.Justia.com 1 2 3 Martin McCarthy (Bar No.194915) EMAIL: martin_mccarthy@yahoo.com LAW OFFICE OF MARTIN MCCARTHY 9618 National Blvd. Los Angeles, CA 90034 PH: (310) 601-6214 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ii [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) On June 29, 2010, Plaintiffs Santa Barbara Channelkeeper and 1 2 Environmental Defense Center (“Channelkeeper”) filed their Notice of Application 3 and Application to Appoint a Receiver, and Notice of Motion and Motion Add 4 Richard Sloan as a Defendant and Judgment Debtor (“Motion”). Dkt. Nos. 414 5 and 415. Chickadee filed its Opposition to Application for Appointment of 6 Receiver and Motion to Amend Judgment (“Opposition”) on July 9, 2010. Dkt. 7 No. 416. On July 22, 2010 the Court held a status conference and heard oral 8 9 argument on Channelkeeper’s Motion. Dkt. No. 419. Channelkeeper and 10 defendants Chickadee Environmental Remediation Company (“Chickadee”) 11 (collectively “the Parties”) appeared. Id. The Court held further status 12 conferences regarding Channelkeeper’s Motion on August 2, 2010 (Dkt. No. 420), 13 August 23, 2010 (Dkt. No. 422), August 30, 2010 (Dkt. No. 423), and September 14 20, 2010 (Dkt. No. 427). On September 14, 2010, Channelkeeper filed a 15 supplemental statement regarding Chickadee’s accounting documents produced 16 (Dkt. No. 424) and Chickadee filed its objections on September 16, 2010 (Dkt. No. 17 426). 18 19 Findings of Fact and Conclusions of Law Having considered the Motion, the Opposition, supplemental briefing, 20 and evidence and oral argument presented at the five status conferences the Court 21 hereby makes the following Finds of Fact and Conclusions of Law: 22 1. A district court has broad discretion in appointing a receiver and may 23 consider a host of relevant factors, no single one of which is dispositive. Canada 24 Life Assurance Co. v. LaPeter, 563 F.3d 837, 845 (9th Cir. 2009). 25 2. Among other things, the court may consider whether there is an 26 imminent danger of loss of property, the inadequacy of legal remedies, and 27 whether harm to be caused by denying the appointment would outweigh harm to 1 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 the party opposing the appointment of a receiver, if one is appointed. Id.; Solis v. 2 Matheson, 563 F.3d 425, 438 (9th Cir. 2009). 3 4 5 3. Channelkeeper has a property interest in Chickadee’s assets as a judgment creditor. 4. Given that Chickadee has refused to pay any amount of the judgment 6 against it since October of 2008, almost two years ago, and has repeatedly failed to 7 fully comply with Channelkeeper’s reasonable discovery requests concerning 8 Chickadee’s financial assets and status, and whereas a receiver can take exclusive 9 control and possession over Chickadee’s assets for the purpose of executing the 10 judgment entered in this case there is a clear necessity to protect Channelkeeper’s 11 property interest through receivership. 12 5. Channelkeeper has a valid claim in the underlying action as evidenced in 13 the settlement agreement first entered by this Court on October 31, 2008 (Dkt. No. 14 330), subsequently modified and ordered on December 11, 2008 (Dkt. No. 345), 15 and because Channelkeeper has obtained orders from this Court finding Chickadee 16 in civil contempt. Dkt. Nos. 372, 374, and 386. 17 6. There is imminent risk of fraudulent conduct. Chickadee has repeatedly 18 disobeyed this Court’s orders, including this Court’s May 4, 2010 order granting 19 Channelkeeper’s motion for civil contempt, its August 25, 2009 order requiring 20 payment by September 25, 2009, and the U.S. Magistrate Judge’s order for 21 debtor’s exam. Dkt. Nos. 372, 386, 391, 410 at ¶ 9, respectively. Further, 22 Chickadee gave post-judgment discovery responses that were inconsistent with the 23 information it provided during the October 2009 debtor’s exam. See Dkt. No. 410, 24 ¶ 20. Finally, though Channelkeeper had been seeking payment of its judgment 25 since at least October 20, 2008, Chickadee concealed the existence of outstanding 26 state court judgments in Texas until the debtor’s examination of Chickadee, which 27 was conducted approximately one year later. See Dkt. No. 410, ¶ 9. 2 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 7. There is also imminent risk of loss of Channelkeeper’s property interest. 2 Chickadee has failed to pay any portion of the judgment against it first obtained by 3 Channelkeeper on October 31, 2008 – almost two years ago. See Dkt. No. 410, 4 ¶¶ 5 and 8. Chickadee has also failed to pay according to the payment schedule 5 stipulated and ordered by the Court to on December 11, 2008. See Dkt. Nos. 344 6 and 345; see also Dkt. No. 410, ¶ 6. Chickadee’s President Richard Sloan testified 7 during the examination that Chickadee lacked the cash or corporate assets 8 sufficient to pay the judgment, and that Chickadee would not have any assets with 9 which to pay the judgment until one or more of Chickadee’s site remediation 10 transactions cleared escrow or resulted in income to Chickadee. Dkt. No. 410, ¶ 9. 11 However, Chickadee failed, despite repeated requests, and despite Channelkeeper’s 12 duly propounded post judgment discovery, to produce adequate financial 13 documentation to allow Channelkeeper to identify corporate assets sufficient to 14 satisfy the Judgment and this Court’s orders. See Dkt. No. 410, ¶¶ 9-23. On 15 August 2, 2010, Chickadee this Court ordered Chickadee to provide 16 Channelkeeper all accounting documents relating to Chickadee within two weeks 17 of that date. Dkt. No. 420. Chickadee was then ordered to have its accountant 18 contact counsel for Channelkeeper no later than August 25, 2010 (Dkt. No. 422), 19 and was again ordered to provide all accounting documents on September 7, 2010 20 (Dkt. No. 423). Chickadee failed to produce a complete set of the required 21 documents. See Dkt. No. 427. Further, Richard Sloan, Chickadee’s President, also 22 disclosed at the October 2009 debtor’s examination conducted by Channelkeeper 23 that, in addition to this Court’s August 25, 2009 order totaling nearly $293,000, 24 two other outstanding money judgments were pending against Chickadee in the 25 State of Texas totaling approximately $300,000.00. See Dkt. No. 410, ¶ 9. Sloan 26 further revealed that a receiver had been appointed by a Texas state court to 27 recover one of these judgments. See id. 3 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 8. The legal remedies available to Channelkeeper are, and have been to 2 date, inadequate due to Chickadee’s repeated refusal to comply with this Court’s 3 prior orders. On May 4, 2009, the Court issued an Order granting Channelkeeper’s 4 Contempt Motion, which awarded Channelkeeper the money due, as well as 5 interest and Channelkeeper’s attorneys’ fees and costs, and allowed Chickadee, at 6 its request, on or before July 13, 2009 to pay. Dkt. No. 372. Chickadee failed to 7 make any payment under that order. See Dkt. No. 410, ¶ 5. After Channelkeeper 8 notified the Court that no payment was made, Chickadee’s President, Richard 9 Sloan, signed and filed a Declaration with the Court on August 19, 2009 asserting 10 that in a matter of weeks Chickadee would obtain the funds it needed to begin 11 paying the judgment, and further requesting a 30-day extension of time in which to 12 pay. Dkt. No. 381. On August 25, 2009, the Court entered an order awarding 13 Channelkeeper all money past due, Channelkeeper’s additional attorneys’ fees and 14 costs, and a contempt sanction of $1,000.00 for a total of $292,909.68. Dkt. No. 15 386. That order also awarded Channelkeeper attorneys’ fees and costs for 16 conducting the debtor examination, and interest on the judgment at the rate of 10 % 17 per annum. Id. Chickadee has failed to pay any portion of that August 25, 2009 18 order. See Dkt. No. 410, ¶ 8. Additionally, Chickadee has not complied with the 19 Court’s orders issued on August 2, 2010, August 25, 2010, and August 30, 2010 20 relating to Chickadee’s failure to produce post-judgment discovery documents. 21 See Dkt. Nos. 420, 422, 423, and 425. 22 9. There is no harm to Chickadee in appointing a receiver to protect 23 Channelkeeper’s interests and effectuate payment of the judgment against it by 24 Chickadee. Chickadee has already agreed to pay Channelkeeper the judgment 25 amount as established by the settlement agreement executed on or about July 31, 26 2008, and entered by this Court in October 2008. See Dkt. No. 330. Chickadee 27 has represented to the Court that payment would be made in a declaration 4 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 from its President Richard Sloan filed on August 19, 2009 (Dkt. No. 381), and 2 during the civil contempt proceedings in May of 2009. See Dkt. No. 410, ¶ 6. 3 10. Further, any harm to Chickadee is outweighed by the harm to 4 Channelkeeper because Channelkeeper is a non-profit public interest organization 5 with a valid property interest as a judgment creditor. See Dkt. No. 410, ¶¶ 4-5. 6 11. Channelkeeper was successful on its claims underlying this action as it 7 obtained the settlement agreement entered by this Court in October 2008. Dkt. 8 Nos. 326, 330 and 345. Appointing a receiver with authority to control, assess, and 9 distribute, as necessary, Chickadee’s assets in satisfaction of Channelkeeper’s 10 property interest in the judgment will provide a reasonable remedy to 11 Channelkeeper, as discussed above, thus preventing irreparable injury resulting 12 from Chickadee’s non-payment. 13 12. It is unclear when, if ever, that Channelkeeper will recover its property 14 interest in the judgment absent appointment of a receiver. On August 19, 2009, 15 Chickadee filed a declaration stating it had insufficient funds to satisfy the 16 judgment, or that payment would be delayed until its site remediation projects were 17 approved and the funds released from escrow. Dkt. No. 381. Chickadee has failed 18 to make any payments on the judgment, however, and Channelkeeper has 19 established that there are other judgments entered against Chickadee in Texas (Dkt. 20 No. 410, ¶ 9); further, Chickadee has failed to provide Channelkeeper with all 21 financial records and accounts as required and ordered by this Court (See Dkt. Nos. 22 420, 422, 423, and 425). 23 13. In the Courts’ discretion to consider the above facts, the Court finds that 24 imposing a receivership upon Chickadee for the purpose of executing the judgment 25 entered in favor of Channelkeeper in this case is warranted. 26 27 5 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 [Proposed] Order 2 Having reviewed Channelkeeper’s Application for Appointment of 3 Receiver and Motion to Amend Judgment to Add Richard Sloan as a Defendant 4 and Judgment Debtor, Chickadee’s Opposition to Application for Appointment of 5 Receiver and Motion to Amend Judgment, and having considered the Parties’ oral 6 argument during the Status Conference held October 14, 2010 and the previous 7 hearings before this Court held on August 2, 2010, August 23, 2010, August, 30, 8 2010, and September 20, 2010, and having made the above Findings of Fact and 9 Conclusions of Law: 10 IT IS HEREBY ORDERED that David J. Pasternak is appointed as 11 Limited Receiver of Chickadee Environmental Remediation Company, effective 12 upon filing of a Receiver’s oath in this Court to faithfully perform his duties. The 13 Receiver is appointed for the limited purpose of executing the judgment entered in 14 this case, including all past and future awards of attorneys’ fees and costs, and all 15 receivership costs of administration. 16 17 18 19 20 IT IS FURTHER HEREBY ORDERED that the Receiver’s duties and powers are as follows: I. Duties and Authority of the Receiver a. Exclusive Management, Possession, and Control 14. The Receiver has full and exclusive power, duty, and authority to 21 administer and manage all of the business affairs, funds, assets, choses in action 22 and any other property of Chickadee, and is vested with all of the powers of the 23 shareholders, directors and officers of Chickadee. No one other than the Receiver 24 has authority to file any voluntary bankruptcy petition on behalf of Chickadee. 25 15. The Receiver is authorized to, and shall, take exclusive possession and 26 control of any and all documents, records, property and assets, wherever located 27 6 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 within or without this state, of Chickadee including, but not limited to, the 2 following: 3 All accounts, contract rights, general intangibles and payment 4 intangibles, including without limitation, contracts and accounts, all 5 proceeds thereof, and all writings or other records in whatever form 6 (including electronic) which document any of them, including, but not 7 limited to, written agreements, purchase orders, invoices, receipts, 8 checkbooks, check registers, passbooks, journals, ledgers and books 9 of account from which Chickadee receives payments or other data used in or related to its business. 10 11 The Receiver is also authorized to, and shall, take possession of any and all real 12 property owned by Chickadee, or in which Chickadee has an interest. Title of any 13 such assets taken under the Receiver’s exclusive possession and control is vested 14 by operation of law in the Receiver. The Receiver shall comply with the 15 requirements of 28 U.S.C. § 754. 16 16. The Receiver is authorized to take all necessary steps to receive, collect, 17 and review all mail addressed to Chickadee. At the Receiver’s discretion, the 18 Receiver is authorized to instruct the U.S. Postmaster to reroute, hold, and/or 19 release said mail to the Receiver. Mail the Receiver reviews in performance of his 20 duties, will promptly thereafter be made available to Chickadee at its request for 21 inspection. 22 17. The Receiver is authorized to, and shall, take possession of all bank 23 accounts, wherever located within or without this state, and shall receive 24 possession of any money on deposit in said bank accounts. Any bank or other 25 financial institution maintaining any such account shall, upon presentation of a 26 copy of this order, immediately deliver any such funds to the Receiver and shall 27 7 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 provide the Receiver with copies of any documents or records concerning such 2 accounts as the Receiver may request. 3 18. The Receiver is authorized to, and shall, demand, collect, and hold all 4 accounts receivable of Chickadee and all proceeds thereof including, but not 5 limited to, any escrow accounts containing funds to be dispersed upon the 6 occurrence of a particular event. 7 19. The Receiver is authorized to, and shall, present for payment any checks, 8 money orders, negotiable instruments or commercial paper through which 9 Chickadee is compensated for its goods and/or services. The Receiver is 10 authorized to, and shall, endorse the same and collect the proceeds, including, but 11 not limited to, the proceeds from any escrow accounts containing funds to be 12 dispersed upon the occurrence of a particular event. 13 20. The Receiver is authorized to, and shall, cause to be sold any real 14 property taken under the Receiver’s exclusive possession and control if such sale is 15 necessary to the discharge of the duties and powers set forth in this order. 16 21. The Receiver is authorized to, and shall, deposit all proceeds collected 17 and taken under the Receiver’s exclusive possession and control into an interest 18 bearing bank account (“Receiver Trust Account”) to be thereafter used and 19 maintained by the Receiver in furtherance of the Receiver’s duties and powers set 20 forth herein. The Receiver shall keep detailed accounting records of all deposits to 21 and all expenditures from the Receiver Trust Account, and shall maintain those 22 accounting records until the expiration the receivership. 23 22. The Receiver may employ agents, employees, clerks, accountants, 24 attorneys, and property managers to administer the receivership estate, purchase 25 materials, supplies and services, and pay for them at the ordinary and usual rates 26 out of the funds which shall come into the Receiver’s possession and shall do all 27 things and incur the risks and obligations ordinarily incurred by 8 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 owners, property managers and operators of similar properties and enterprises as 2 such Receiver. No such risk or obligation so incurred shall be the personal risk or 3 obligation of the Receiver, but shall be the risk and obligation of the receivership 4 estate. 5 23. The Receiver and his office personnel shall be paid their usual hourly 6 billable rates, and reimbursement of costs. The Receiver’s current hourly billable 7 rate is $495. The Receiver shall prepare and serve monthly statements reflecting 8 the Receiver’s fees and administrative expenses, including fees and costs of agents, 9 accountants and attorneys engaged by the Receiver to assist in the administration 10 of the receivership estate, incurred for each monthly period in the operation and 11 administration of the receivership estate. Fees and expenses shall be submitted to 12 the Court for its approval and confirmation in the form of either a properly noticed 13 interim request for fees, stipulation of all parties, or Receiver’s Final Accounting 14 and Report. 15 24. The Receiver is authorized to, and shall, execute and prepare all 16 documents, and perform all acts, either in Chickadee’s name or in the Receiver’s 17 own name which are necessary or incidental to preserving, protecting, managing, 18 and controlling Chickadee’s assets, accounts, and other real or personal property. 19 25. The Receiver is authorized enter into contracts as the Receiver 20 reasonably believes necessary for the maintenance and operation of Chickadee and 21 the purposes of this receivership. 22 26. The Receiver is authorized to, and shall, disperse funds deposited in the 23 Receiver Trust Account in satisfaction of the judgment entered in this case against 24 Chickadee in favor of Channelkeeper, including all past and future awards to 25 Channelkeeper of attorneys’ fees and costs, and interest, at which time there are 26 sufficient deposits to make such dispersal. The Receiver shall not expend any 27 funds deposited into the Receiver Trust Account for any purpose other than that 9 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 expressly provided in this order. In the event that the Receiver determines that the 2 Receiver Trust Account will not have a balance sufficient to satisfy the judgment 3 entered in this case, including all past and future awards of attorneys’ fees and 4 costs and interest, the Receiver may apply to this Court for further instructions 5 and/or powers, including, but not limited to, an application to include the personal 6 assets of Richard Sloan in the receivership estate in accordance with the 7 investigation into Chickadee’s corporate status as described below. 8 9 27. The Receiver is authorized to take depositions of Chickadee, its agents, directors, officers, shareholders, employees, and/or third parties subject to three (3) 10 business days notice as the Receiver deems necessary to carry out the duties and 11 powers set forth in this order. Notice of such deposition will be sufficient if made 12 orally, by facsimile, electronic mail, or overnight courier. These depositions may 13 be taken telephonically. The Receiver is also authorized to serve interrogatories, 14 requests for the production of documents, and requests for admissions upon 15 Chickadee, its agents, directors, officers, shareholders, employees, and/or third 16 parties. The party receiving such discovery requests shall respond within seven (7) 17 business days of service. Service of discovery requests shall be sufficient if made 18 by facsimile, electronic email, or overnight courier. 19 28. The Receiver is authorized to institute, prosecute, defend, compromise, 20 adjust, intervene in, or become party to such actions or proceedings in state or 21 federal courts or arbitrations or mediations as may in his opinion be necessary or 22 proper for the protection, maintenance, and preservation of Chickadee or its 23 property or the carrying out of the terms of this order, and likewise to defend, 24 compromise, adjust, or otherwise dispose of any or all actions or proceedings 25 instituted against him as receiver or against Chickadee, and also to appear in and 26 conduct the defense of any suit or adjust or compromise any actions or proceedings 27 now pending in any court or arbitration or mediation by or against Chickadee 10 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 where such prosecution, defense, or other disposition of those actions or 2 proceedings will in the judgment of the Receiver be advisable or proper for the 3 protection of Chickadee or its property. 4 29. The Receiver is authorized to engage a locksmith for the purposes of 5 gaining entry to any Chickadee business location or real property, and through any 6 security system, in order to obtain any documents to which the Receiver is entitled 7 pursuant to this Order, as well as giving any notices which may be required in 8 performing the Receiver’s duties. The Receiver may either have the locks changed 9 or have a key created that will work for the locks. 10 30. The Receiver shall, within thirty (30) days of the effective date of this 11 appointment, file and serve an inventory setting forth a list of all assets, 12 documents, and records of which the Receiver has taken exclusive possession 13 pursuant to this order to the Court. The Receiver shall file a supplemental 14 inventory if he takes possession of any additional assets, documents and/or records 15 pursuant to this order after thirty (30) days of the effective date. 16 31. The Receiver shall, within sixty (60) days after the effective date of this 17 appointment, file and serve a detailed accounting of Chickadee’s assets listed in the 18 inventory with the Court. In this report, the Receiver shall assess whether the 19 inventoried assets are sufficient to satisfy the judgment entered in this case, or 20 whether the inventoried assets will in the future be sufficient to satisfy the 21 judgment. 22 32. The Receiver shall also investigate whether Chickadee is, or was, under 23 capitalized, has failed to meet corporate formalities, and is controlled by Richard 24 Sloan. The Receiver shall conduct this investigation by examining the documents, 25 records, and other relevant information taken into the Receiver’s exclusive control 26 and possession under the duties and powers set forth in this order. Within sixty 27 (60) days of the effective date of this order, the Receiver shall file his 11 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 findings relating to this investigation with the Court along with the records and 2 other documentation supporting those findings. The Receiver may in accordance 3 with such findings, at his discretion, apply for an order from this Court to add 4 Sloan as a defendant and judgment debtor. The Receiver may seek the assistance 5 of legal counsel in making this application; such legal counsel is entitled to 6 reasonable compensation payment of which shall be approved by the Court when 7 included in the Receiver’s interim request for fees. The Court will consider an 8 application to add Sloan as a defendant and judgment debtor, and will amend or 9 modify this order as warranted. 10 33. The parties, and each of them, on receipt of this order shall provide the 11 Receiver with any tax identification numbers utilized by Chickadee. The Receiver 12 shall also be entitled to utilize such tax identification numbers during his operation 13 of the receivership estate. 14 34. The Receiver shall determine upon taking possession of the estate 15 whether in the Receiver’s judgment there is sufficient insurance coverage. With 16 respect to any insurance coverage, the Receiver shall be named as an additional 17 insured on the policies for the period that the Receiver shall be in possession of the 18 estate. If sufficient insurance coverage does not exist, the Receiver shall 19 immediately notify the parties to this lawsuit and shall have thirty (30) days to 20 procure sufficient all-risk and liability insurance on the estate (including if 21 appropriate earthquake and flood insurance) provided, however, that if the 22 Receiver does not have sufficient funds to do so, the Receiver shall seek 23 instructions from the Court with regard to whether insurance shall be obtained and 24 how it is to be paid for. If consistent with existing law, the Receiver shall not be 25 responsible for claims arising from the lack of procurement or inability to obtain 26 insurance. 27 35. Upon reasonable notice, the parties shall have access to all non12 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 privileged documents in the Receiver’s possession, and may copy any such 2 documents at their expense. 3 36. If the Receiver receives notice that a bankruptcy has been filed and part 4 of the bankruptcy estate may include property that is the subject of this order, the 5 Receiver shall have the following duties: 6 a. The Receiver shall immediately contact plaintiffs’ counsel and 7 determine whether plaintiffs intend to move in the bankruptcy 8 court for an order for (1) relief from the automatic stay, and 9 (2) relief from the Receiver’s obligation to turn over the property 10 (11 U.S.C. § 543). If the party has no intention to make such a 11 motion, the Receiver shall immediately turn over the subject 12 property to the appropriate entity, either to the trustee in 13 bankruptcy if one has been appointed or, if not, to the debtor in 14 possession – and otherwise comply with 11 U.S.C. § 543. 15 b. If any party intends to seek relief immediately from both the 16 automatic stay and the Receiver’s obligation to turn over the 17 subject property, the Receiver may remain in possession and 18 preserve the property pending the ruling on those motions (11 19 U.S.C. § 543(a)). The Receiver’s authority to preserve the 20 property shall be limited as follows: 21 c. The Receiver may continue to collect any income; 22 d. The Receiver may make only those disbursements necessary 23 preserve and protect the subject property; 24 e. The Receiver shall not execute any new long-term contracts; 25 and 26 f. The Receiver shall do nothing that would effect a material 27 13 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 change in the circumstances of the subject property. 2 g. If no party files a motion within 10 court days after receipt of 3 notice of the bankruptcy filing, the Receiver shall immediately 4 turn over the subject property to the appropriate entity, either to 5 the trustee in bankruptcy if one has been appointed or, if not, to 6 the debtor in possession and otherwise comply with 11 U.S.C. 7 § 543. 8 37. Within sixty (60) days of satisfaction of the judgment entered in this 9 case, including all past and future awards of attorneys’ fees and costs, and interest 10 to Channelkeeper, the Receiver shall submit to the Court a Final Accounting and 11 Report of all remaining assets, deposits, real or personal property, and any other 12 tangibles or intangibles taken under the Receiver’s exclusive control and 13 possession. The Final Accounting and Report shall include detailed information 14 relating to (1) total proceeds received listed by source, (2) total expenditures made 15 enumerated by major categories, (3) net amount of any surplus or deficit, and (4) 16 any other information the Receiver has in his exclusive control and possession as 17 authorized by this order. 18 19 II. Cooperation a. Defendants 20 38. Chickadee, and all agents, or persons within the employ, of Chickadee 21 (including contract employees), and all persons in concert and participation with 22 Chickadee and its employees, shall fully cooperate with the Receiver in the 23 discharge of his duties and powers under this order, and shall promptly respond to 24 all inquiries and requests related to compliance with the Court’s orders in this case. 25 Chickadee, its agents, and/or employees shall take no action, directly or indirectly, 26 to hinder, obstruct, or otherwise interfere with the Receiver in the conduct of the 27 Receiver’s duties and powers authorized by this order. 14 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 39. Any such person who interferes with the Receiver’s access, as 2 authorized by this order, or otherwise thwarts or delays the Receiver’s performance 3 of his duties under this Order, shall be subject to contempt proceedings before this 4 Court. The Receiver may, as necessary, seek the assistance from legal counsel, in 5 ensuring full cooperation by Chickadee, its agents, and/or employees, including 6 filing civil contempt proceedings against those who do not cooperate. 7 40. Chickadee and its officers, directors, agents, employees, shareholders, 8 and other persons who are in custody, possession, or control of any assets, books, 9 records, or other property of Chickadee shall deliver forthwith upon demand such 10 property, monies, books and records to the Receiver, and shall grant to the 11 Receiver the authorization to be a signatory as to all accounts at banks, brokerage 12 firms, escrow companies, or financial institutions which have possession, custody 13 or control of any assets or funds in the name of or for the benefit of Chickadee, 14 including, but not limited to, any escrow accounts containing funds the dispersal of 15 which is contingent upon the occurrence of a particular event. 16 41. Unless authorized by the Receiver, Chickadee, its agents, and/or 17 employees, shall take no action, nor purport to take any action in the name of or on 18 behalf of Chickadee. 19 b. Counsel 20 42. Counsel for Chickadee shall cooperate with the Receiver’s duties and 21 powers under this order, and shall turn over any and all non-privileged records, 22 documents, and other information in counsel’s possession relevant to the 23 Receiver’s duties and powers. 24 25 26 27 c. Third Parties 43. All banks, brokerage firms, financial institutions, and other business 15 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 entities, including but not limited to, escrow companies, which have possession, 2 custody or control of any assets, funds or accounts in the name of, or for the 3 benefit of Chickadee shall cooperate in the granting of control and authorization as 4 a necessary signatory as to all assets and accounts to the Receiver. 44. No bank, savings and loan association, or other financial institution, or 5 6 any other person or entity shall exercise any form of set off, alleged set off, lien, or 7 any form of self-help whatsoever, or refuse to transfer any funds or assets to the 8 Receiver’s control without the permission of this Court. 9 10 11 III. Bond and Jurisdiction a. Bond 45. No bond shall be required in connection with appointment of the 12 Receiver. Except for an act of gross negligence, the Receiver shall not be liable for 13 any loss or damage incurred by Chickadee or by the Receiver’s officers, agents, or 14 employees, or any other person, by reason of any act performed or omitted to be 15 performed by the Receiver in connection with the discharge of the Receiver’s 16 duties and powers. 17 b. Jurisdiction 18 46. The Receiver shall be relieved of all duties and powers authorized by 19 this order, and the receivership herein imposed shall expire, upon satisfaction of 20 the judgment entered in this case, including all past and future awards of attorneys’ 21 fees and costs, and interest, to Channelkeeper, and approval of the Receiver’s final 22 accounting and report. Any and all remaining assets, records, documents, and 23 other tangibles or intangibles taken under the Receiver’s exclusive control and 24 possession, as set forth in the final accounting and report, shall be delivered to 25 Chickadee within thirty (30) days after the termination of the receivership. 26 27 47. In the event the judgment entered in this case is not satisfied, or for other extenuating circumstances, upon application to and approval from this 16 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx) 1 2 Court the Receiver may be relieved of his duties and powers. 48. This Court shall retain jurisdiction of this matter for all purposes. The 3 Receiver may at any time apply to this Court for any further instructions or powers 4 necessary to enable the Receiver to perform his duties properly. 5 6 IT IS SO ORDERED. 7 Dated: October 14, 2010 8 _______________________ 9 Honorable George H. Wu United States District Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 17 [Proposed] Order/ Statement of Reasons CV 01-00456 GW (RZx)
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