Posted in: Resource Articles

POST JUDGMENT RECEIVERSHIPS

Court-Appointed receivers are used in various ways to bring control to out of control situations.  Some of the various reasons a receiver may be appointed include abating nuisance properties, compensating victims of Ponzi schemes, finding ways to wind down corporations, reforming prison medical care, among many other reasons.

Receivers can also be used to enforce or effectuate judgements.[1] This can occur in a number of ways.  For example, the City of Elk Grove had a property that was the site of substantial criminal activity, but the code violations were insufficient for a Health and Safety Receivership.[2]  The nuisance property was the site of substantial criminal activity that included numerous drug deals, shootings, and other nefarious activity.[3]  To address the nuisance issues at the property, the Sacramento County Court declared the property a public nuisance on April 17, 2019.[4]  Despite the property being declared a public nuisance, none of the occupants left and the criminal activity continued.  The City then decided appointing a receiver was necessary to enforce the court’s judgment.  The court granted the City’s request to appoint Gerard F. Keena II from Bay Area Receivership Group as a receiver over the nuisance property on August 5, 2019.[5] Within a few months of the receiver’s appointment, the occupants were cleared from the property, the criminal activity was resolved, the property was sold to a responsible owner, and the entire neighborhood celebrated.[6]

Post-judgment receiverships can be used to resolve nuisance properties.  Another way post-judgment receivers can be used is by judgment creditors to collect funds from debtors.[7]  As creditors know, even with a valid judgment collecting debts can be difficult.  Judgment creditors can garnish wages, record liens, and send demand letters, but these paths are often ineffective.[8] However, if a post-judgment receiver is appointed, the receiver can act as a forensic accountant, take control of the debtor’s assets and even sell them subject to court confirmation.[9] It is worth noting that California courts have held that receivers can be appointed for the sole purpose of collecting a money judgment.[10]

Banks are regularly straddled with substantial amounts of uncollectible debt and hire collection agencies to assist.  Collection agencies can be effective, but receivers are hands of the court with great power.[11]  Receivers can take control of a debtor’s personal and real property then sell them in a manner they believe is best for the receivership estate.[12]  Banks can even appoint post-judgment receivers over debtor corporations to ensure that the corporation’s creditors are paid before other business interests.[13]

In summary, receivers can be used to enforce judgments by the powers granted to them by the court. Using these powers, a receiver can sell real or personal property or even monitor a corporation to ensure judgment debts are paid.  Therefore, banks and other debtors struggling to collect on money judgments should look at how receivership can help resolve uncollected judgment debts.  

[1]Bryan D. Sampson, Esq., Tools for Judgment Creditors: Post-Judgment Receiverships Enhance the Collection Process, Receivership News, (Fall 2003, Issue 11) https://www.receivers.org/recnews/fall03.pdf. (last visited Apr. 2, 2020).

[2] Angela Greenwood, Elk Grove Suing Property Owner Over Problem Home, (August 3, 2017), https://sacramento.cbslocal.com/2017/08/03/elk-grove-suing-property-owner-over-problem-home/

[3] Cameron MacDonald, Neighborhoods Feud with Landlord Ends, Elk Grove Citizen, (Sept. 20, 2019), http://www.egcitizen.com/news/neighborhood-s-feud-with-landlords-ends/article_61de6fac-dbd2-11e9-bc78-17b81b46112c.html

[4] Sacramento County Case #34-2017-00216691.

[5] Id.

[6] George Warren, Elk Grove Neighborhood Celebrates “Hell House Auction”, CBS Sacramento, (Nov. 27, 2019), https://sacramento.cbslocal.com/2019/11/27/elk-grove-neighborhood-celebrates-hell-house-auction/

[7] Bryan D. Sampson, Esq., Tools for Judgment Creditors: Post-Judgment Receiverships Enhance the Collection Process, Receivership News, (Fall 2003, Issue 11) https://www.receivers.org/recnews/fall03.pdf. (last visited Apr. 2, 2020).

[8] Id.

[9] Id.

[10] Olsan v. Comora, 73 Cal. App. 3d 642, 646 (1977)

[11] Takeba v. Superior Court of San Joaquin County (1919) 43 Cal. App. 469, 473-474.

[12] City of Riverside v. Horspool (1973) 35 Cal. App.3d 572, 583

[13] Crocker National Bank v. O’Donnell (1981) 115 Cal. App. 4th 264 267-268.)