BABKEN HAROUTUNIAN VS. ZAVEN HAROUTUNIAN

TENTATIVE RULING

Calendar: 9

Date: 8/21/20

Case No: EC 064630

Case Name: Haroutunian v. Haroutunian

MOTION TO APPROVE RECEIVER’S FINAL REPORT

[CRC Rule 3.1184]

Moving Party: Kevin Singer, Receiver

Responding Party: No Opposition

FACTUAL AND PROCEDURAL BACKGROUND:

Plaintiff Babken Haroutunian alleges that in June of 2008 he entered into an oral agreement with defendant Zaven Haroutunian, his younger brother, whereby defendant would assist plaintiff in finding and acquiring real estate for income and investment purposes. The parties agreed that defendant would use his knowledge and experience to locate available real estate, that plaintiff would provide the capital necessary to purchase the real estate in plaintiff’s name, and if necessary, make improvements to the property, in exchange for which plaintiff would share with defendant the net income and profits from the property.

In furtherance of the agreement, plaintiff applied for and received a home equity line of credit (“HELOC”) in the amount of $238,123, on his property on Bonfield Avenue in North Hollywood, with the funds transferred directly to defendant’s bank account. In 2009, plaintiff located a property on Vantage Avenue in North Hollywood (“subject property”) and the parties agreed to purchase it as an investment according to their partnership agreement, and the property was purchased with the HELOC funds. In December of 2009, plaintiff agreed to let defendant reside at the property while they determined a long-term plan for the subject property, and defendant is currently still residing on the property. The complaint alleges that in 2014, plaintiff learned that title to the subject property was in defendant’s name alone, and that defendant for an unknown period of time had been renting out a portion of the subject property for income purposes without plaintiff’s knowledge and without sharing with plaintiff any income or profits from the rentals.

In March of 2015, defendant acknowledged that he had wrongfully used the HELOC funds for his own benefit and agreed to submit rent to plaintiff on a monthly basis until the funds were repaid and sent six payments. Plaintiff alleges that no further payments have been made since July of 2015, and defendant has not transferred legal ownership of the subject property to plaintiff.

On March 23, 2017, the matter was called for a final status conference. The court’s minute order notes that a “Stipulation and Order RE: Binding Arbitration” had been signed and filed.

The Stipulation had been signed as an order of the court on March 16, 2017, and provides, “The matter shall be submitted to binding arbitration and the parties waive their right to a trial de novo as provided by California Code of Civil Procedure, section 1141.20.”

On September 22, 2018, the court heard a motion to confirm the arbitration award, and for the appointment of a receiver. The motion was granted in part, the award being confirmed as made by the arbitrator, and the request for a receiver was denied.

Judgment was entered on October 30, 2017, providing, in pertinent part,

“g. Plaintiff has established that the Vantage Property was purchased by Defendant on behalf of Plaintiff and Defendant as equal partners, pursuant to the Agreement….

2. That judgment in favor of Plaintiff Babken Haroutunian and against Defendant Zaven Haroutunian be entered in the amount of $172,600.00 with interest thereon at the rate of ten percent (10%) per annum, to accrue from the date of entry of this Judgment.

3. That Defendant Zaven Haroutunian holds title to 8013 Vantage Ave., North Hollywood, CA 91605 as a Trustee of a Constructive Trust for the benefit of himself and Plaintiff Babken Haroutunian.

4. That Defendant Zaven Haroutunian holds title to 8013 Vantage Ave., North Hollywood, CA 91605 as a Trustee of a Resulting Trust for the benefit of himself and Plaintiff Babken Haroutunian.”

On June 22, 2018, the court heard a motion by plaintiff Babken Haroutunian to have the court order that the property owned jointly by the parties pursuant to the judgment be subject to a charging order under CCP § 708.310 and Corporations Code § 16504. The motion was granted, and a charging order issued constituting a lien on judgment debtor’s transferable interest in the partnership, including the real property held in constructive trust pursuant to the partnership agreement, as described in the judgment in this matter.

Judgment Creditor Babken Haroutunian then sought to have the court appoint a receiver to sell the Vantage Avenue North Hollywood property to satisfy the judgment and charging order.

The motion was heard on November 16, 2018, was unopposed, and was granted, and the court signed an order appointing a receiver to take possession and control of the real property and granting the receiver the power and authority to sell the property by way of public sale.

In response to an ex parte application by the receiver for a writ of possession to remove judgment debtor Zaven Haroutunian and other occupants from the property, the court remanded the case to the arbitrator to determine whether the court order directing the sale of the property was in fact within the authority of the receiver.

The parties submitted to arbitration, and on May 3, 2019, the arbitrator signed a Supplement to Arbitration Award, determining:

“it was and is the Arbitrator’s belief that Claimant should be able to use any remedy attendant to partnership or trust property disputes, e.g., partition, receivership, etc. to enforce the Award and these remedies may result the [sic] sale of the Vantage Property.”

On August 30, 2019, the court heard a motion by the Receiver seeking instructions from the court on whether to proceed with the sale of the property, and an order issuing a writ of possession in order to sell the property. The court issued an order instructing the Receiver to proceed with the sale of the subject property, and also ordered a writ of possession to issue to remove any occupants of the property. The court further ordered that the Receiver’s fees be paid out of the proceeds of the sale of the house without prejudice to either plaintiff or defendant seeking to charge the other party for the fees as part of any final judgment once there is a final

accounting for the partnership.

On December 16, 2019, the court conducted a court confirmation and overbid hearing, and ordered the property sold to Andranik Aneiab or Assignee (“Buyer”) for $750,000. There being no other offer or bid, the court signed the Receiver's Order for Sale of Property.

The Receiver indicates that on January 28, 2020, the sale of the property to the Buyer closed. The Receiver indicates that now that the property has sold, Receiver has fulfilled his duties and is relieved of his duties. The receiver appointment is terminated.

OPPOSITION:

No opposition.

ANALYSIS:

This proceeding is governed by CRC Rule 3.1184, which provides for the presentation of Receiver's final account and report:

“(a) Motion or stipulation

A receiver must present by noticed motion or stipulation of all parties: (1) A final account and report; (2) A request for the discharge; and (3) A request for exoneration of the receiver's surety.

(b) No memorandum required

No memorandum needs to be submitted in support of the motion or stipulation served and filed under (a) unless the court so orders.

(c) Notice

Notice of the motion or of the stipulation must be given to every person or entity known to the receiver to have a substantial, unsatisfied claim that will be affected by the order or stipulation, whether or not the person or entity is a party to the action or has appeared in it.

(d) Claim for compensation for receiver or attorney

If any allowance of compensation for the receiver or for an attorney employed by the receiver is claimed in an account, it must state in detail what services have been performed by the receiver or the attorney, and whether previous allowances have been made to the receiver or attorney and the amounts.”

The report is in order. There is no written opposition challenging any portion of the report, or request of the receiver. The compensation claimed by the receiver is set forth in billings attached as Exhibit 7. The billing rates vary between $275, $250 and $85 per hour, which is reasonable. Evidently, major portion of the total fees claimed have already been paid from operations. The total fees and expenses claimed through the conclusion of the hearing are $90,570 in fees and $3,900.93 in expenses, with the Receiver having been paid $82,848.35 so far from operations, leaving an outstanding balance for fees and expenses of $11,632.08. [Singer Decl., para. 5]. The billings are reasonable. [Ex. 7].

The declaration indicates what previous payments have been made, and the amount left due and owing. It also appears that bills have been sent to the parties during the course of the receivership, in connection with reports filed with the court, and have not been objected to.

The Receiver indicates that there is a Receiver Trust Account Balance of $385,439.53. The Receiver proposes that he be authorized to distribute the Balance as follows:

Receiver—For Outstanding Fees and Expenses= $11,623.08

Plaintiff Babken Hartounian share of net sale proceeds= $370,435.66

Defendant Zaven Hartounian share of net sale proceeds= $3,380.79

Evidently, the Receiver gave each of the partners the opportunity to submit claims against the sale proceeds. Plaintiff submitted claims for unpaid judgment interest ($34,368.45), post-arbitration attorney’s fees ($77,897.75), post arbitration rents due ($18,720), and for mediation expenses ($1,800). [Ex. 4]. The Receiver awarded only $1,600 of the claim for mediation expenses, as plaintiff evidently had only $1,600 in receipts. [Ex. 4]. The supporting documentation for plaintiff’s claim is attached. [Ex. 5].

It appears that defendant made a claim of $724,069 against the sale proceeds. [Ex. 6]. The declaration of the Receiver notes that, “Defendant did not submit any documentation or other type of evidence to support his claims set forth in ‘Exhibit 6.’” [Singer Decl., para. 6]. Those claims were evidently accordingly rejected, with plaintiff’s claims being deducted from defendant’s 50 % share of the proceeds, leading to the distribution above. This process is in order.

The paperwork is to be in order, the appropriate notice has been given, and the report is approved.

RULING:

[No opposition]

Motion for Order Approving and Settling Receiver’s Final Report and Accounting is GRANTED. The Court finds pursuant to CRC Rule 3.1184 (d) that the Final Report and Accounting filed supports with sufficient detail an allowance of compensation for the Receiver in the sum of $90,570 in fees and $3,900.93 in expenses, as requested. The Court accepts and approves the final account and report and the recommended distribution of the funds remaining in the Receiver Trust Account, and pursuant to CRC Rule 3.1184(a) grants the Receiver’s request for discharge of the Receiver and for exoneration of the Receiver’s surety.

The proposed order appears to be in order and will be signed by the Court.

GIVEN THE CORONAVIRUS CRISIS, AND TO PROMOTE APPROPRIATE SOCIAL DISTANCING, UNTIL FURTHER ORDERED, DEPARTMENT D IS ENCOURAGING AUDIO OR VIDEO APPEARANCES

Please make arrangements in advance if you wish to appear via LACourtConnect by visiting www.lacourt.org, and scheduling a remote appearance. Please note that LACourtConnect offers an audio-only appearance option at a current cost of $15.00 and a video appearance option at a cost of $23.00. Counsel and parties (including self-represented litigants) are encouraged not to personally appear, unless they have obtained advance permission of the Court. Anyone who appears in person for the hearing will be required to comply with strict social distancing measures, including, but not limited to, assigned seating, capacity limitations in the courtroom, designated waiting areas, and strictly enforced spacing in line to communicate with court staff. If no appearance is set up through LACourtConnect, or otherwise, then the Court will assume the parties are submitting on the tentative.