CWR HOLDINGS LLC VS BOMEL SAN DIEGO EQUITIES LLC ET AL

Tentative Rulings

Case Number: BC607132    Hearing Date: September 22, 2020    Dept: 37

HEARING DATE: September 22, 2020

CASE NUMBER: BC607132

CASE NAME: CWR Holdings LLC v. Bomel San Diego Equities, LLC, et al.

MOVING PARTY: Judgment Creditor/Assignee of Record WVJP 2018-3, LP

OPPOSING PARTIES: Defendants, Bomel San Diego Equities, LLC and Robert Rechnitz

TRIAL DATE: None, Default Judgment entered August 17, 2016

PROOF OF SERVICE: OK

MOTION: Defendant’s Motion for Appointment of Limited Receiver

OPPOSITION: September 10, 2020

REPLY: September 15, 2020

TENTATIVE: WVJP’s motion for appointment of a limited receivership is DENIED. WVJP to give notice.

Background

This action arises out of a Profit Sharing Agreement between Plaintiff, CWR Holdings, LLC (“CWR”) and Defendant, Bomel San Diego Equities, LLC (“Bomel”). Pursuant to this agreement, Bomel allegedly agreed to pay CWR $612,500.00 plus a deemed yield on such amount outstanding equivalent to 10% per annum, plus a “Profit Component” as defined in the agreement. Further, Defendant Robert Rechnitz (“Mr. Rechnitz”) allegedly issued a written Guarantee on January 30, 2014 guaranteeing Bomel’s obligations to CWR. Despite these agreements, CWR alleges that Bomel failed to pay as agreed. CWR further alleges that although it gave notice to Bomel and Mr. Rechnitz of Bomel’s failure to pay, neither defendant has cured the default.

Plaintiffs’ Complaint alleges the following causes of action: (1) breach of profit-sharing agreement against Bomel, (2) breach of guarantee against Mr. Rechnitz.

On August 17, 2016, the court entered default judgment in this action. On December 8, 2016, amended judgment was entered in this action as follows:

Damages: $612,500

Prejudgment interest: $166,969.17

Attorney’s fees: $8,015.00

Costs: $435

Total: $787,919.17

Judgment Creditor/Assignee of Record WVJP 2018-3, LP (“WVJP”) now moves for the appointment of a limited receiver. Defendants Bomel and Mr. Rechnitz (“Defendants”) oppose the motion.

Discussion

1. Legal Standard

Pursuant to Code of Civil Procedure section 564, subdivision (b)(4), a receiver may be appointed after judgment, “to carry the judgment into effect,” or “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.” (Code Civ. Proc. § 564, subdivision (b)(3)-(b)(4).) Additionally, Section 708.620 of the Code of Civil Procedure provides:

“The court may appoint a receiver to enforce the judgment where the judgment creditor shows that, considering the interests of both the judgment creditor and judgment debtor, the appointment of a receiver is a reasonable method to obtain the fair and orderly satisfaction of the judgment.”

Receivers are agents of the court and may only be appointed when authorized by statute. (Marsch v. Williams (1994) 23 Cal.App.4th 238, 247-248.) “Appointment of a receiver is a drastic remedy to be employed only in exceptional circumstances.” (1993) 16 Cal.App.4th 734, 744.) Where appropriate, “[a] court may appoint a ‘limited purpose receiver,’ leaving the parties to operate remaining aspects of a business.” (Gold v. Gold (2003) 114 Cal.App.4th 791, 802.)

1. Analysis

WVJP requests that the court appoint Stephen J. Donnell as a limited purpose receiver as specified in its Proposed Order, for the purpose of seizing “bomelco.com.” (Motion, 5-8.) WVJP’s proposed order indicates that all of the following is requested:

1. Receiver is to seize and take control of Bomelco.com;

2. Receiver is to investigate, seize, supervise, manage, monitor and/or sell Bomelco.com and any associated email addresses and websites;

3. Defendants and/or anyone acting on their behalf are to be enjoined from destroying or spoliating any documents related to the receiver’s seizing of Bomelco.com;

4. Defendants and/or anyone else must immediately turn over passwords and access information the receiver;

5. Receiver is permitted to apply for further instructions or powers necessary to enable the receiver to “perform his duties.”

(see Proposed Order in Support of Motion.) WVJP relies on Office Depot, Inc. v. Zuccarini (N.D. Cal. 2007) 621 F.Supp.2d 773 (Office Depot) in support of the argument that a limited receiver is warranted in this instance to take control of bomelco.com.

WVJP’s reliance is misplaced. Office Depot defines whether a domain name is appropriately considered “property” such that a receiver can be appointed, and where the domain name can be considered located for purposes of determining whether a motion for appointment of receiver is appropriate. (Id. at 775-778.) Although Office Depot does indicate that appointing a receiver was appropriate in that instance, there is no discussion of why the Office Depot court found that appointing a receiver was appropriate. (Id. at 778.)

In opposition, Defendants argue that WVJP’s motion should be denied because it has not demonstrated that bomelco.com or any other property of Defendants is in danger of being destroyed such that receivership is warranted. (Opposition, 2-4.) Defendants also argue that a receivership is not warranted because bomelco.com has no value. (Id.)

The court agrees with Defendants that no receivership is warranted. WVJP’s only argument in favor of a receivership relies on an erroneous interpretation of Office Depot. However, Office Depot stands for the proposition that a receivership can be set up for a domain name, not that a receivership must be set up for all domain names. Here, WVJP has not made showing that a receivership is required to “carry the judgment into effect” or “to dispose of property according to the judgment,” other than statements to this effect. This is insufficient to warrant granting WVJP’s motion.

Conclusion

WVJP’s motion for appointment of a limited receivership is DENIED. WVJP to give notice.