Governing Law

California Code of Civil Procedure §564

§ 564. Cases in which appointment of receiver is authorized
(a) A receiver may be appointed, in the manner provided in this chapter, by the court in which an action or proceeding is pending in any case in which the court is empowered by law to appoint a receiver.
(b) A receiver may be appointed by the court in which an action or proceeding is pending, or by a judge thereof, in the following cases:
(1) In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor's claim, or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured.
(2) In an action by a secured lender for the foreclosure of a deed of trust or mortgage and sale of property upon which there is a lien under a deed of trust or mortgage, where it appears that the property is in danger of being lost, removed, or materially injured, or that the condition of the deed of trust or mortgage has not been performed, and that the property is probably insufficient to discharge the deed of trust or mortgage debt.
(3) After judgment, to carry the judgment into effect.
(4) After judgment, to dispose of the property according to the judgment, or to preserve it during the pendency of an appeal, or pursuant to the Enforcement of Judgments Law Title 9 (commencing with Section 680.010), or after sale of real property pursuant to a decree of foreclosure, during the redemption period, to collect, expend, and disburse rents as directed by the court or otherwise provided by law.
(5) Where a corporation has been dissolved, as provided in Section 565.
(6) Where a corporation is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights.
(7) In an action of unlawful detainer.
(8) At the request of the Public Utilities Commission pursuant to Section 855 or 5259.5 of the Public Utilities Code.
(9) In all other cases where necessary to preserve the property or rights of any party.
(10) At the request of the Office of Statewide Health Planning and Development, or the Attorney General, pursuant to Section 129173 of the Health and Safety Code.
(11) In an action by a secured lender for specific performance of an assignment of rents provision in a deed of trust, mortgage, or separate assignment document. The appointment may be continued after entry of a judgment for specific performance if appropriate to protect, operate, or maintain real property encumbered by a deed of trust or mortgage or to collect rents therefrom while a pending nonjudicial foreclosure under power of sale in a deed of trust or mortgage is being completed.
(12) In a case brought by an assignee under an assignment of leases, rents, issues, or profits pursuant to subdivision (g) of Section 2938 of the Civil Code.
(c) A receiver may be appointed, in the manner provided in this chapter, including, but not limited to, Section 566, by the superior court in an action brought by a secured lender to enforce the rights provided in Section 2929.5 of the Civil Code, to enable the secured lender to enter and inspect the real property security for the purpose of determining the existence, location, nature, and magnitude of any past or present release or threatened release of any hazardous substance into, onto, beneath, or from the real property security. The secured lender shall not abuse the right of entry and inspection or use it to harass the borrower or tenant of the property. Except in case of an emergency, when the borrower or tenant of the property has abandoned the premises, or if it is impracticable to do so, the secured lender shall give the borrower or tenant of the property reasonable notice of the secured lender's intent to enter and shall enter only during the borrower's or tenant's normal business hours. Twenty-four hours' notice shall be presumed to be reasonable notice in the absence of evidence to the contrary.
(d) Any action by a secured lender to appoint a receiver pursuant to this section shall not constitute an action within the meaning of subdivision (a) of Section 726.
(e) For purposes of this section:
(1) "Borrower" means the trustor under a deed of trust, or a mortgagor under a mortgage, where the deed of trust or mortgage encumbers real property security and secures the performance of the trustor or mortgagor under a loan, extension of credit, guaranty, or other obligation. The term includes any successor in interest of the trustor or mortgagor to the real property security before the deed of trust or mortgage has been discharged, reconveyed, or foreclosed upon.
(2) "Hazardous substance" means any of the following:
(A) Any "hazardous substance" as defined in subdivision (h) of Section 25281 of the Health and Safety Code.
(B) Any "waste" as defined in subdivision (d) of Section 13050 of the Water Code.
(C) Petroleum including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof.
(3) "Real property security" means any real property and improvements, other than a separate interest and any related interest in the common area of a residential common interest development, as the terms "separate interest," "common area," and "common interest development" are defined in Section 1351 of the Civil Code, or real property consisting of one acre or less that contains 1 to 15 dwelling units.
(4) "Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment, including continuing migration, of hazardous substances into, onto, or through soil, surface water, or groundwater.
(5) "Secured lender" means the beneficiary under a deed of trust against the real property security, or the mortgagee under a mortgage against the real property security, and any successor in interest of the beneficiary or mortgagee to the deed of trust or mortgage.

 

California Code of Civil Procedure §708.630

§ 708.630. Receiver to transfer alcoholic beverage license
(a) The judgment debtor's interest in an alcoholic beverage license may be applied to the satisfaction of a money judgment only as provided in this section.
(b) The court may appoint a receiver for the purpose of transferring the judgment debtor's interest in an alcoholic beverage license that is transferable under Article 5 (commencing with Section 24070) of Chapter 6 of Division 9 of the Business and Professions Code, unless the judgment debtor shows in the proceeding to appoint a receiver that the amount of delinquent taxes described in Section 24049 of the Business and Professions Code and claims of creditors with priority over the judgment creditor pursuant to Section 24074 of the Business and Professions Code exceed the probable sale price of the license.
(c) The receiver may exercise the powers of the licensee as necessary and in exercising such powers shall comply with the applicable provisions of Division 9 (commencing with Section 23000) of the Business and Professions Code and applicable regulations of the Department of Alcoholic Beverage Control. An application shall be filed to transfer the license to the receiver and a temporary retail permit shall be obtained during the pendency of the transfer.

Legislative Committee Comments to § 708.630
Section 708.630 supersedes a portion of former Section 688(f). After the amendment of former Section 688 in 1959 (1959 Cal. Stats. ch. 2140, § 1), alcoholic beverage licenses were not reachable by any state enforcement process. See 37 Ops. Cal. Att'y Gen. 4 (1961). Alcoholic beverage licenses are not subject to levy under a writ of execution. See Section 699.720(a). The Alcoholic Beverage Control Act (commencing with Business and Professions Code Section 23000) provides detailed procedures for the sale of alcoholic beverage licenses which make use of a receiver appropriate. Cf. Mollis v. Jiffy-Stitcher Co., 125 Cal. App.2d 236, 270 P.2d 25 (1954).
In order to prevent a situation where the judgment creditor forces the sale of the judgment debtor's license but does not receive any proceeds to be applied toward satisfaction of the judgment, subdivision (b) precludes transfer if the judgment debtor shows that it is unlikely that the sale of the license would yield any excess over the amount required to satisfy delinquent taxes under Business and Professions Code Section 24049 and claims of creditors with priority over the judgment creditor under Business and Professions Code Section 24074. The scheme of priorities set out in Section 24074 is "mandatory and exclusive." Grover Escrow Corp. v. Gole, 71 Cal.2d 61, 65, 453 P.2d 461, 463, 77 Cal. Rptr. 21, 23 (1969). See also Bus. & Prof. Code § 24076.
Subdivision (c) enables the receiver to exercise the powers of the licensee as necessary to comply with the transfer provisions of the Alcoholic Beverage Control Act. The strict regulation of all aspects of alcoholic beverage licenses by the Alcoholic Beverage Control Act requires that the receiver comply with its procedures and the regulations of the Department of Alcoholic Beverage Control.

 

Federal Rule of Civil Procedure 69

Rule 69. Execution
(a) In General.
(1) Money Judgment; Applicable Procedure. A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution--and in proceedings supplementary to and in aid of judgment or execution--must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.
(2) Obtaining Discovery. In aid of the judgment or execution, the judgment creditor or a successor in interest whose interest appears of record may obtain discovery from any person--including the judgment debtor--as provided in these rules or by the procedure of the state where the court is located.
(b) Against Certain Public Officers. When a judgment has been entered against a revenue officer in the circumstances stated in 28 U.S.C. § 2006, or against an officer of Congress in the circumstances stated in 2 U.S.C. § 118, the judgment must be satisfied as those statutes provide.

 

J&J Sports Productions, Inc. v. Bachman (2011, E.D.Cal.)
This recent U.S. District Court, Eastern District of California case illustrates how the California State Enforcement of Judgments Law applies to Federal judgments, particularly to the sale of Alcoholic Beverage licenses.

J&J Sports Productions, Inc. v. Bachman, 2011 WL 1376605 (E.D.Cal., Slip Copy, April 12, 2011)
United States District Court, E.D. California.

J & J SPORTS PRODUCTIONS, INC., Plaintiff,
v.
Ann Marie BACHMAN and Geneva Jones, individually and dba the Blue Moon Lounge & Sports Bar, Defendants.

Civ. No. S–09–1225 FCD/KJN.

April 12, 2011.

MEMORANDUM AND ORDER

FRANK C. DAMRELL, JR., District Judge.

*1 This matter is before the court on plaintiff J & J Sports Productions, Inc.'s ("plaintiff") motion to appoint a receiver in aid of enforcement of a judgment against defendants Ann Marie Bachman and Geneva Jones, individually and doing business as, The Blue Moon Lounge & Sports Bar (collectively "defendants") pursuant to Federal Rule of Civil Procedure 69(a). Plaintiff obtained a judgment against defendants which defendants have failed to pay. (Pl .'s Mot. to Appoint Receiver ["Pl.'s Mot."], filed Feb. 17, 2011 [Docket # 18–1], at 2.) By this motion, plaintiff requests the court appoint a receiver to take possession of and sell defendants' liquor license bearing number 428624, as the proceeds from the sale would provide for orderly payment of the judgment. ( Id.) Defendants did not file a written opposition, or otherwise respond, to plaintiff's motion. For the reasons set forth below,FN1 plaintiff's motion is GRANTED.
FN1. Because oral argument will not be of material assistance, the court orders the matter submitted on the briefs. E.D. Cal. L.R. 230(g).

BACKGROUND
Plaintiff is a closed-circuit distributor of sports and entertainment programming. (Compl., filed May 4, 2009 [Docket # 1], ¶ 6.) Pursuant to a contract, plaintiff acquired exclusive commercial exhibition licensing rights to a televised boxing match entitled "The World Awaits: Oscar De La Hoya v. Floyd Mayweather, Jr., WBC Light Middleweight Championship Fight Program" (the "Program"), which was broadcast via telecast on Saturday, May 5, 2007. ( Id. ¶ 10.) Plaintiff entered into sublicensing agreements with various commercial entities, granting limited public exhibition rights to these entities. ( Id. ¶ 11.) Transmission of the Program was only available to the commercial entities that had paid plaintiff a commercial sublicense fee to broadcast the program. (Gagliardi Aff., filed Dec. 11, 2009 [Docket # 11], ¶ 3.)
Defendants are alleged to be the owners, operators, or licensees of The Blue Moon Lounge & Sports Bar ("The Blue Moon"). (Compl.¶¶ 7–8.) Plaintiff's investigator, Jason Garner, observed the Program being unlawfully exhibited by defendants as defendants had not obtained a sublicense from plaintiff. (Gagliardi Aff. ¶ 7.)
Based on that conduct, on May 4, 2009, plaintiff filed suit against defendants in this court alleging violations of 47 U.S.C. §§ 605 and 553, conversion, and violation of California Business and Professions Code §§ 17200 et seq. (Compl.¶¶ 9–27.) Declarations filed with the court demonstrate that plaintiff, through a process server, served defendants Bachman and Jones. FN2 ( See Docket # 5, 6.) On August 11, 2009, the Clerk of the Court entered a default against defendants based on their failure to respond to the complaint. (Docket # 8.) On December 7, 2009, plaintiff filed a motion for default judgment against defendants. (Docket # 10.) On June 16, 2010, this court granted plaintiff's motion entering judgment against defendants and awarding plaintiff statutory damages in the amount of $10,000. (Order re: Pl.'s Mot. for Default J. ["Order"], filed June 16, 2010 [Docket # 15].) Plaintiff brings the instant motion requesting the court appoint a receiver to take possession of and sell defendants' alcoholic beverage license to provide for payment of the judgment. (Pl.'s Mot at 1–2.)

FN2. Plaintiff's process server made several attempts to personally serve defendants at their place of business as their residence addresses were not known at the time of service. ( See Docket # 5, 6.) Subsequently, plaintiff process server served defendants by substitute service, leaving copies of the Summons in a Civil Case, Complaint, Certification as to Interested Parties, Civil Cover Sheet, and Order Requiring Joint Status Report with Angela Godearde, the person in charge. ( See Docket # 5, 6.) In addition, plaintiff's process server mailed copies of the aforementioned documents in a sealed envelope to defendants' place of business, The Blue Moon. ( See Docket # 5, 6.)

ANALYSIS

*2 Rule 69(a) of the Federal Rules of Civil Procedure governs the execution of final judgments and states that "a money judgment is enforced by a writ of execution ... [and][t]he procedure on execution—and in proceedings supplementary to and in aid of judgment or execution—must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies." Fed.R.Civ.P. 69(a)(1). Thus, the court must first determine whether a federal statute applies to an appointment of a receiver in aid of enforcing a judgment.
Federal Rule of Civil Procedure 66 ("Rule 66") FN3 governs the appointment of receivers. Fed.R.Civ.P. 66. The Ninth Circuit has held that because "[t]he federal rules, including Rule 66, qualify as federal statutes under Rule 69(a) [,] ... Rule 66 prevails over any state law to the extent it applies." Office Depot, Inc. v. Zuccarini, 596 F.3d 696, 701 (9th Cir.2010) (internal citations omitted). However, when the federal statute is a general procedural rule, specific state statutes addressing the particular procedure at issue apply. See id. at 701–703. Thus, " 'state law has been applied under Rule 69(a) to ... appointment of receivers,' when such actions are undertaken in aid of executing a judgment." Id. at 700. Because California has a specific statute governing the appointment of a receiver of a liquor license, the court looks to California law to determine whether plaintiff is entitled to have such a receiver appointed. See Cal.Civ.Proc.Code § 708.630(a) ("The judgment debtor's interest in an alcoholic beverage license may be applied to the satisfaction of a money judgment only as provided in this section.").

FN3. Rule 66 provides: These rules govern an action in which the appointment of a receiver is sought or a receiver sues or is sued. But the practice in administering an estate by a receiver or a similar court-appointed officer must accord with the historical practice in federal courts or with a local rule. An action in which a receiver has been appointed may be dismissed only by court order. Id.

Under California law, the alcoholic beverage license of a judgment debtor is subject to enforcement of a money judgment. See Cal.Civ.Proc.Code §§ 708.630, 695.010(a), 699.710; Office Depot, 596 F.3d at 701. "The court may appoint a receiver ... 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." Cal.Civ.Proc.Code § 708.620. However, when the receiver is appointed for the purpose of transferring the judgment debtor's interest in an alcoholic beverage license, California Code of Civil Procedure section 708.630 limits this power if "the judgment debtor shows in the proceeding to appoint a receiver that the amount of delinquent taxes ... and claims of creditors with priority over the judgment creditor exceed the probable sale price of the license." Id. § 708.630(b).
In the present case, the court finds that plaintiff has shown that appointment of a receiver of defendants' alcoholic beverage license is a reasonable method to obtain satisfaction of the judgment. Plaintiff represents that following entry of judgment, it has sent post-judgment discovery to defendants in an attempt to obtain payment to satisfy the judgment. (Mem. P. & A. in Supp. of Pl.'s Mot. ("MPA"), filed Feb. 17, 2011 [Docket # 18–2], at 5.) Defendants have ignored these discovery requests and have refused payment of the judgment. ( Id.) Only upon plaintiff's own search of the License Query System website maintained by the California Department of Alcoholic Beverage Control ("ABC") did plaintiff identify defendants' alcoholic beverage license bearing number 428624. (Cook Decl., filed Feb. 17, 2011 [Docket # 18–3], ¶¶ 4–5, Ex. C.) Plaintiff's counsel also avers that based on his experience, "installing a keeper at [d]efendants' place of business would be [a more] burdensome and expensive" alternative to collection on the liquor license. (MPA at 5.) Finally, defendants have failed to respond to any of plaintiff's motions, including the instant motion. As such, the court finds that, considering the interests of both parties, plaintiff is entitled to have a receiver appointed to take possession and control of defendants' alcoholic beverage license. See, e.g., J & J Sports Prods., Inc. v. Huezo, No. C 09–4906 CW, 2011 WL 1134265 (N.D.Cal. March 25, 2011) (granting plaintiff's motion to appoint a receiver of an alcoholic beverage license under similar circumstances).

CONCLUSION
*3 For the foregoing reasons, IT IS HEREBY ORDERED that:
1. Plaintiff's motion for appointment of a receiver in aid of enforcement of judgment is GRANTED.
2. The court appoints SHERI L. CARELLO, GARRY L. NESS, or SUSAN K. SMITH as receiver to perform the duties and responsibilities set forth in this order and shall be compensated at the expense of defendants, by a percentage to be determined based upon the amount recovered from the sale of the alcoholic beverage license.
3. The receiver shall have the following duties and powers pursuant to Federal Rule of Civil Procedure 66 and California Code of Civil Procedure § 708.630:
A. To take possession and control of defendants' alcoholic beverage license bearing the number 428624 in accordance with the California Business and Professions Code and applicable regulations of the ABC.
B. To file with the ABC the surrender of the alcoholic beverage license under California Administrative Code tit. 4, § 65.
C. To retain the services of a business opportunity broker, if necessary, to place the alcoholic beverage license on the market for purposes of a competitive sale.
D. To retain the services of an attorney and an accountant, if necessary, to aid and assist in the sale of the alcoholic beverage license.
E. To proceed with the sale, pay any priority tax liens, if at all, distribute the balance of the funds to plaintiff first, and thereafter to other creditors, if any.
4. Defendants are restrained from:
A. The sale, transfer, or other disposition of the license.
B. Any act to interfere with the receiver's efforts to sell the license.

IT IS SO ORDERED.