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This case was last updated from Los Angeles County Superior Courts on 10/23/2018 at 20:53:10 (UTC).

BAUM R BRUCE ET AL VS ALTA DIVERSIFIED INC ET AL

Case Summary

On 05/31/2017 BAUM R BRUCE filed a Contract - Other Contract lawsuit against ALTA DIVERSIFIED INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is JOHN P. DOYLE. The case status is Disposed - Dismissed.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****3325

  • Filing Date:

    05/31/2017

  • Case Status:

    Disposed - Dismissed

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

JOHN P. DOYLE

 

Party Details

Plaintiffs and Petitioners

MICHAEL SCHELL

HOLGER FORTNAGEL

BRIAN LOVELL

DANIEL CROUCHER

TORY METZGER

ROLAND PALENCIA

KENNETH FUCHS

KYLE MILLSAP

BRUCE BAUM R.

ZAVALIA CRISTINA

YIAMOUYIANNIS APOLLO

Defendants and Respondents

DABBAS SAM

ALTA DIVERSIFIED INC.

DOES 1-50 INCLUSIVE

GRIEVES WALTER

RELIEF CCR

MAKIMOTO CHRISTOPHER

CCR RELIEF

Attorney/Law Firm Details

Plaintiff and Petitioner Attorney

HODGE ARTHUR D. ESQ.

Defendant and Respondent Attorneys

MARC A. INDEGLIA

WELCH DAVID R. ESQ.

 

Court Documents

NOTICE OF CONTINUED HEARING ON MOTION TO BE RELIEVED AS COUNSEL AND CASE MANAGEMENT CONFERENCE

3/5/2018: NOTICE OF CONTINUED HEARING ON MOTION TO BE RELIEVED AS COUNSEL AND CASE MANAGEMENT CONFERENCE

ORDER GRANTING ATTORNEY'S MOTION TO BE RELIEVED AS COUNSEL-CIVIL

3/19/2018: ORDER GRANTING ATTORNEY'S MOTION TO BE RELIEVED AS COUNSEL-CIVIL

NOTICE OF ORDER TO SHOW CAUSE HEARING

5/15/2018: NOTICE OF ORDER TO SHOW CAUSE HEARING

Minute Order

5/24/2018: Minute Order

Minute Order

11/13/2017: Minute Order

PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION TO STRIKE PORTIONS OF THE COMPLAINT

10/30/2017: PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION TO STRIKE PORTIONS OF THE COMPLAINT

NOTICE OF CASE MANAGEMENT CONFERENCE

6/12/2017: NOTICE OF CASE MANAGEMENT CONFERENCE

PROOF OF SERVICE SUMMONS

6/19/2017: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE SUMMONS

6/19/2017: PROOF OF SERVICE SUMMONS

ANSWERING DEFENDANTS' VERIFIED ANSWER AND AFFIRMATIVE DEFENSES TO PLAINTIFFS' VERIFIED COMPLAINT

8/4/2017: ANSWERING DEFENDANTS' VERIFIED ANSWER AND AFFIRMATIVE DEFENSES TO PLAINTIFFS' VERIFIED COMPLAINT

REQUEST FOR ENTRY OF DEFAULT

8/4/2017: REQUEST FOR ENTRY OF DEFAULT

Proof of Service

8/10/2017: Proof of Service

VERIFICATION OF COMPLAINT FILED HEREIN MAY 31, 2017 BY PLAINTTFF HOLGER FORTNAGEL

8/30/2017: VERIFICATION OF COMPLAINT FILED HEREIN MAY 31, 2017 BY PLAINTTFF HOLGER FORTNAGEL

VERIFICATION OF COMPLAINT FILED HEREIN MAY 31, 2017 BY PLAINTIFF APOLLO YIAMOUYIANNIS

8/30/2017: VERIFICATION OF COMPLAINT FILED HEREIN MAY 31, 2017 BY PLAINTIFF APOLLO YIAMOUYIANNIS

Minute Order

9/1/2017: Minute Order

VERIFICATION OF COMPLAINT FILED HEREIN MAY 31, 2017 BY PLAINTIFF R. BRUCE BAUM

9/19/2017: VERIFICATION OF COMPLAINT FILED HEREIN MAY 31, 2017 BY PLAINTIFF R. BRUCE BAUM

VERIFICATION OF COMPLAINT FILED HEREIN MAY 31,2017 RY PLAINTIFF CRISTINA ZAVALIA

9/19/2017: VERIFICATION OF COMPLAINT FILED HEREIN MAY 31,2017 RY PLAINTIFF CRISTINA ZAVALIA

Unknown

9/28/2017: Unknown

50 More Documents Available

 

Docket Entries

  • 07/23/2018
  • at 09:00 AM in Department 58; Jury Trial - Not Held - Advanced and Vacated

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  • 07/17/2018
  • at 09:00 AM in Department 58; Final Status Conference - Not Held - Advanced and Vacated

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  • 07/03/2018
  • at 08:30 AM in Department 58; (Pretrial Conference; Order of Dismissal) -

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  • 07/03/2018
  • Minute Order

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  • 07/02/2018
  • SUBSTITUTION OF ATTORNEY-CIVIL

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  • 07/02/2018
  • Substitution of Attorney; Filed by Defendant/Respondent

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  • 07/02/2018
  • SUBSTITUTION OF ATTORNEY-CIVIL

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  • 06/14/2018
  • Proof of Service

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  • 05/30/2018
  • Proof of Service

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  • 05/30/2018
  • NOTICE OF HEARING RE: PRETRIAL CONFERENCE, ALL PURPOSE STATUS CONFERENCE, AND ORDER TO SHOW CAUSE HEARING RE: STRIKING ANSWERS OF DEFENDANTS RELIEF CCR, SAM DABBAS, AND CHRISTOPHER MAKIMOTO

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73 More Docket Entries
  • 06/19/2017
  • PROOF OF SERVICE SUMMONS

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  • 06/19/2017
  • Proof-Service/Summons; Filed by Plaintiff/Petitioner

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  • 06/19/2017
  • PROOF OF SERVICE SUMMONS

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  • 06/12/2017
  • ORDER TO SHOW CAUSE HEARING

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  • 06/12/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 06/12/2017
  • OSC-Failure to File Proof of Serv; Filed by Clerk

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  • 06/12/2017
  • Notice of Case Management Conference; Filed by Clerk

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  • 05/31/2017
  • SUMMONS

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  • 05/31/2017
  • VERIFIED COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF: 1. BREACH OF CONTRACT-PROMISSORY NOTES; ETC

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  • 05/31/2017
  • Complaint; Filed by Baum R. Bruce (Plaintiff); Croucher Daniel (Plaintiff); Fortnagel Holger (Plaintiff) et al.

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Tentative Rulings

Case Number: BC663325    Hearing Date: November 12, 2020    Dept: 58

Judge John P. Doyle

Department 58


Hearing Date: November 12, 2020

Case Name: Baum v. Alta Diversified, Inc., et al.

Case No.: BC663325

Matter: Motion to Vacate Order as to Appointment of Receiver and Injunctive

Relief

Moving Party: Defendant Relief CCR

Responding Party: Plaintiffs Bruce Baum, Daniel Croucher, Holger Fortnagel, Kenneth

Fuchs, Brian Lovell, Tory Metzger, Kyle Millsap, Roland Palencia, Michael Schell, Apollo Yiamouyiannis, and Cristina Zavalia


On October 13, 2020, the Court appointed a receiver to take control of Defendant Relief CCR’s cannabis business in order to satisfy the judgment in this action. The Court also granted injunctive relief to enable the receiver to take action.

Defendant Relief CCR now moves to vacate the aforementioned order because (1) Defendant did not receive notice of the motion to appoint a receiver; (2) the order is deficient; and (3) the order has been improperly enforced.

(a) Timeliness & Notice

As an initial matter, Plaintiffs argue the instant Motion is an untimely motion for reconsideration under Code Civ. Proc. § 1008(a).

However, the Court has inherent authority to reconsider its own rulings. (See, e.g., Le Francois v. Goel (2005) 35 Cal.4th 1094, 1109.)

On the other hand, now that this matter has been briefed, it makes sense to vacate or modify the Court’s receivership order only to the extent Defendant’s substantive arguments have merit.

(b) Claimed Deficiencies of Order

(i) Amount to be Collected

Defendant argues the Court’s order is deficient because it allows for the receiver to collect more money than provided for by the judgment in this action. This lacks merit because the Court’s order makes no reference to any amount to be collected.

(ii) Cannabis Regulations—Pre-Approval of License Transfer

Defendant also argues the order is deficient because it fails to require compliance with regulations applicable to cannabis businesses. Specifically, Defendant argues that the order fails to require that the receiver be pre-approved by local regulators to conduct Defendant’s business, citing Bus. & Prof. Code § 26001(a)(l) and LAMC §§ 104.01(a)(20), 104.11(a).

Defendant’s cited authority does not apparently support its contentions. Bus. & Prof. Code § 26001(a)(l) and LAMC § 104.01(a)(20) merely define the term “owner” or “applicant” for subsequent authority. Further, LAMC § 104.11(a) requires a pre-approval application by a licensee for the transfer of a license. (LAMC § 104.11(a) [“A License is not transferable unless the change to the Licensee's organizational structure or ownership is submitted to and approved by DCR. The Licensee shall complete a change of ownership application, pay all applicable fees and obtain the written approval of the change of ownership by DCR, pursuant to the Rules and Regulations.”].) It makes little sense to require that the licensee file an application for pre-approval with respect to a Court appointed receiver.

Rather, a receivership is governed by 16 C.C.R. § 5024 which provides, “In the event of the death, incapacity, receivership, assignment for the benefit of creditors or other event rendering one or more owners incapable of performing the duties associated with the license, the owner or owners' successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the Bureau in writing, within 14 calendar days, by submitting the Notification and Request Form, BCC-LIC-027 (New 10/18), which is incorporated herein by reference.” (16 C.C.R. § 5024(a).)

On the other hand, 16 C.C.R. § 5024 also contemplates that the successor in interest (here the receiver) obtain written approval to continue business operations. (16 C.C.R. § 5024(c) [“The Bureau may give the successor in interest written approval to continue operations on the licensed business premises for a period of time specified by the Bureau: (1) If the successor in interest or another person has applied for a license from the Bureau for the licensed premises and that application is under review; (2) If the successor in interest needs additional time to destroy or sell cannabis goods; or (3) At the discretion of the Bureau.”].) Further, the declaration of the receiver—which was filed after Defendant’s reply—seems to indicate that the receiver’s Notification and Request Form has not been processed such that the current operation of Defendant’s business appears unlawful. (See Singer Decl. ¶ 12 [“Indeed, as the Court-appointed Receiver, upon the Bureau of Cannabis Control processing the Notification and Request form, I can request that METRC appoint me as the primary user of the METRC account . . . .”] (emphasis added).)

The Court may modify its order to require that no business operations take place until the receiver obtains approval per 16 C.C.R. § 5024(c). This will be further discussed at the Motion hearing.

(iii) Undertaking

Defendant also argues the order fails to provide for a bond per Code Civ. Proc. § 567.

Code Civ. Proc. § 567(b) provides, “The receiver shall give an undertaking to the State of California, in such sum as the court or judge may direct, to the effect that the receiver will faithfully discharge the duties of receiver in the action and obey the orders of the court therein. The receiver shall be allowed the cost of the undertaking.”

An undertaking is discretionary to the extent the receiver was not appointed pursuant to an ex parte application. (Ahart, Cal. Prac. Guide Enf. J. & Debt (The Rutter Group 2020) Ch. 4-C [“Unlike ex parte appointments (see ¶ 4:901 ff.), there is no statutory requirement for an applicant's bond when the receiver is appointed on noticed motion. However, the court may in its discretion require the applicant to post an undertaking as a condition of obtaining appointment of a receiver (e.g., where it is obvious an erroneous appointment would damage defendant).”].)

“In determining the amount of the undertaking, judges consider such factors as: (1) the nature and value of the assets to be controlled by the receiver; (2) the likelihood that these assets would be dissipated; (3) the risk of any action having a negative impact on the assets; and (4) the length of time the receivership might be in place (e.g., if the receiver is to collect rents on real property pending foreclosure, the undertaking might be set at a multiple of the monthly rental receipts times the number of months until likely foreclosure).” (Cal. Judges Benchbook Civ. Proc. Before Trial § 14.155, Receiver's Oath and Undertaking.)

Here, as the receivership is for enforcement purposes, it is not clear that an undertaking is necessary. However, this will be further discussed at the Motion hearing as Defendant was not able to propose a bond at the time the Court issued its October 13, 2020, order. (Cal Rules of Court, Rule 3.1178 [“At the hearing of an application for appointment of a receiver on notice or ex parte, the applicant must, and other parties may, propose and state the reasons for the specific amounts of the undertakings required from (1) the applicant by Code of Civil Procedure section 529, (2) the applicant by Code of Civil Procedure section 566(b), and (3) the receiver by Code of Civil Procedure section 567(b), for any injunction that is ordered in or with the order appointing a receiver.”].)

(c) Improper Enforcement

(i) Cannabis Track and-Trace System

Defendant next argues the Court’s order is improper as enforced because the receiver is not using a “Cannabis Track and-Trace System” (“CCTT-METRC”) portal. In response, Plaintiffs provide that, “Receivership Specialists is [sic] in possession of the login credentials for CCTT-METRC, including username and password.” (Yahraus Decl. ¶ 3.)

The receiver further provides, “More than one person can be designated as an authorized user of a METRC account without any need to use Mr. Dabbas’ login credentials. Indeed, as the Court-appointed Receiver, upon the Bureau of Cannabis Control processing the Notification and Request form, I can request that METRC appoint me as the primary user of the METRC account as I am METRC certified. I would then have control over the business’ METRC account and can designate the authorized users therein.” (Singer Decl. ¶ 12.)

It is unclear whose login credentials are currently being referenced/used. However, it would seemingly be improper if the login credentials of Defendant’s agents (here Sam Dabbas) are being used. (16 C.C.R. § 5048(c) [“No account manager or user shall share or transfer his or her log-on, username, or password, to be used by any other individual for any reason.”].) This issue will be further discussed at the Motion hearing.

(ii) Property of Third-Parties

Finally, Defendant argues the enforcement of the subject order is improper because the receiver has seized the property of entities/individuals other than Defendant Relief CCR. Defendant provides the receiver “has seized personal belongings of Dabbas and other Relief employees, including laptop computers, documents, protective personal equipment for COVID-19 prevention, and cash that do not belong to Relief and are unrelated to its business. In addition, the receiver acted outside of the purview of the Order by freezing a bank account which contains deposits not only for Relief, but also for Dabbas and other unrelated third parties whom are not party to this action and are not subject to the terms and provisions of the Order.”

The receiver provides, “As per the Court Order, and as per my experience as a Court Receiver for over 20 years, my first step is to take control over and inventory all of the assets of the business at the premises and then ascertain the legal owner of said assets. The purpose of this is to protect all of the parties involved from claims of diversion. Upon completion of inventory, my staff and I immediately address all claims to property. In this matter, my staff and I have been in near daily contact with Defendants and returned property (including a laptop) that has been proven not to belong to the business. It should also be noted that Defendant operates many businesses at the Receivership locations and commingles businesses and funds which makes it challenging to determine which property and assets belong to this case or other businesses. However, I will make these determinations in short order as Defendant makes me aware of specific property that does not belong to the Receivership Estate.” (Singer Decl. ¶ 12.)

This and the other issues (approval, bond, and CCTT-METRC compliance) referenced herein shall be further discussed.

Case Number: BC663325    Hearing Date: October 13, 2020    Dept: 58

Judge John P. Doyle

Department 58


Hearing Date: October 13, 2020

Case Name: Baum v. Alta Diversified, Inc., et al.

Case No.: BC663325

Matter: Motion to Appoint Receiver and for Injunctive Relief

Moving Party: Plaintiffs Bruce Baum, Daniel Croucher, Holger Fortnagel, Kenneth

Fuchs, Brian Lovell, Tory Metzger, Kyle Millsap, Roland Palencia, Michael Schell, Apollo Yiamouyiannis, and Cristina Zavalia

Responding Party: Unopposed


Tentative Ruling: The Motion is granted.


On April 30, 2019, the Court entered judgment against Defendants Relief CCR, Alta Diversified, Inc., and Walter Grieves for $1,009,350.27.

Plaintiffs Bruce Baum, Daniel Croucher, Holger Fortnagel, Kenneth Fuchs, Brian Lovell, Tory Metzger, Kyle Millsap, Roland Palencia, Michael Schell, Apollo Yiamouyiannis, and Cristina Zavalia now seek for the Court to appoint a receiver to take control of Defendant Relief CCR’s cannabis business in order to satisfy the judgment. Plaintiffs also seek injunctive relief to enable the receiver to take action.

“A judge may appoint a receiver to enforce a judgment when the creditor shows that the appointment is a reasonable method for obtaining the fair and orderly satisfaction of the judgment, considering the interests of both the creditor and the judgment debtor. The creditor need not show that a writ of execution has been returned unsatisfied or that the debtor refuses to apply property in satisfaction of the judgment. Comment to CCP § 708.620. The availability of other remedies does not, of itself, preclude the use of a receivership. Rather, the judge must consider the availability and efficacy of other remedies in determining whether to employ this extraordinary (and generally expensive) remedy. City & County of San Francisco v Daley (1993) 16 CA4th 734, 745, 20 CR2d 256.” (Cal. Judges Benchbook: Civ. Proc. After Trial, Judge's Authority To Appoint Receiver, § 7.65.)

Plaintiffs state, “[w]rits of execution have failed to reach the Judgement or RELIEF with speed or efficacy. The Los Angeles Sherriff Department has policies against performing the civil enforcement mechanism known as a ‘keeper’ on cannabis businesses (see “EXHIBIT 2”), whereby a Sherriff’s Deputy will physically remain in a business and collect all of the cash brought in that day for the judgement creditor. The size of the Judgement is over one million dollars, and a bank levy is most likely impossible or ineffectual against a cash cannabis business like RELIEF, because very few cannabis businesses have banks. The Judgement is of such a high amount that these methods of Judgement enforcement is not practicable, anyhow. As such, there is no adequate remedy at law available to the Plaintiff Judgment Creditors except appointing a Receiver.”

As there is no opposition, the Motion is granted.

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