City of Desert Hot Springs v. Valenti ( 2019 )


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  • Filed 12/13/19; Certified for Partial Pub. 12/19/19 (order attached)
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FOURTH APPELLATE DISTRICT
    DIVISION TWO
    CITY OF DESERT HOT SPRINGS,
    Plaintiff and Appellant,                                     E071694
    v.                                                                    (Super.Ct.No. PSC1802698)
    IRENE VALENTI et al.,                                                 OPINION
    Defendants and Respondents.
    APPEAL from the Superior Court of Riverside County. David M. Chapman,
    Judge. Reversed with directions.
    Gustavo LaManna; Stream Kim Hicks Wrage & Alfaro and Tuan-Anh D. Vu for
    Plaintiff and Appellant.
    No appearance for Defendants and Respondents.
    1
    The City of Desert Hot Springs (the City) tried to abate a public nuisance by
    serving the owner of a dilapidated hotel/motel with notice that it was required to correct
    numerous building and safety violations. When the owner failed to timely correct the
    violations or apply for a permit to raze the building, the City filed a complaint in the
    superior court for a declaration that the building constituted a nuisance and, pursuant to
    Health and Safety Code section 17980.7, subdivision (c) (Stats. 2012, ch. 201, § 3;
    hereafter section 17980.7(c)), requested the appointment of a receiver to oversee the
    building’s rehabilitation. Before it appoints a receiver under that statute, the court must
    determine (1) whether the owner of the property received constitutionally adequate notice
    and an opportunity to correct the health and safety violations within a reasonable amount
    of time, and (2) whether the person nominated to be appointed as a receiver has the
    capacity and expertise to develop and supervise a viable financial and construction plan
    for the rehabilitation of the property.
    Instead of addressing the notice and opportunity given to the owner of the
    hotel/motel and the proposed receiver’s qualifications, however, the trial court here
    questioned the viability of the proposed receiver’s financial and construction plan. And,
    having concluded the plan made no economic sense because the value of the property
    after its rehabilitation would not exceed the costs of rehabilitation plus the additional
    costs associated with appointment of a receiver, the court denied the City’s request and
    subsequently dismissed the action. The City appeals, arguing the court exceeded its
    authority under section 17980.7(c). We agree. Therefore, we reverse the judgment and
    remand for the trial court to reconsider the City’s request for appointment of a receiver.
    2
    I.
    PROCEDURAL BACKGROUND1
    The City filed its complaint for nuisance abatement against Irene Valenti, trustee
    of the I.V. Private Trust dated 04/04/04 (the trustee),2 alleging a five-unit hotel/motel the
    trust owned constituted a public nuisance. Inter alia, the City prayed for (1) a declaration
    that the property was a public nuisance per se, (2) an order abating the public nuisance,
    and (3) appointment of a receiver pursuant to section 17980.7(c) to take control of and
    rehabilitate the property. Thereafter, the City filed a noticed motion requesting the court
    appoint GS Strategies as the receiver, with Kevin Randolph as its representative. The
    City argued it had satisfied the requirements for appointment of a receiver because it had
    given the trust adequate notice of the alleged violations that needed to be repaired and,
    although the trust had been afforded the opportunity to correct the violations within a
    reasonable amount of time, the violations persisted, and the property constituted a public
    nuisance. In addition, the City argued Randolph was qualified to act as receiver. In his
    declaration in support of the motion, Randolph stated he had been appointed by several
    California courts as a receiver in more than 125 nuisance abatement cases. (See, e.g.,
    1 The facts of the alleged nuisance are irrelevant to the limited issue on appeal, so
    they need not be repeated here.
    2  The complaint also named MKI-Valenti, LLC, as a defendant, alleging the
    limited liability corporation was a mortgagee on a mortgage recorded against the
    property, and named the Department of Environmental Health of the County of Riverside
    (the Department) as a defendant because of a lis pendens recorded against the property
    for an administrative proceeding. MKI-Valenti filed a disclaimer of interest in the
    property, and the City dismissed the Department without prejudice.
    3
    City of Riverside v. Horspool (2014) 
    223 Cal.App.4th 670
    , 675.) The City also submitted
    estimates of the costs to rehabilitate the property and the expected return from a sale of
    the property after it was rehabilitated.
    In its tentative ruling, the trial court indicated an appearance at the hearing was
    necessary because the City had not submitted “a meaningful rehabilitation plan, including
    proper construction bids and real estate appraisals in order to determine that the
    rehabilitation is a viable option.” At the hearing, the court continued the matter and
    requested the City file a supplemental brief. The City filed a supplemental brief, and
    Randolph submitted an additional declaration that set forth his construction plan.
    Prior to the continued hearing, the trial court issued a tentative ruling denying the
    motion because the City’s “supplemental briefing fails to offer any evidence that the
    rehabilitation is financially viable.” During the hearing, the court indicated its belief that
    the costs of rehabilitating the property, plus the costs associated with the appointment of a
    receiver, would exceed the eventual sale value, so the option of repairing the property
    instead of selling it to an investor was “just not a viable plan.” The court stated, “I just
    don’t believe that it’s a property that’s capable of being rehabilitated economically.” After
    hearing additional arguments, the court denied the City’s motion without prejudice.
    The City timely filed a notice of appeal from the order denying its motion.
    Thereafter, the court entered a judgment dismissing the action without prejudice.
    4
    II.
    DISCUSSION
    A.     Appealability.
    In its brief, the City acknowledges there is some doubt whether an interim order
    denying a request to appoint a receiver is appealable. “[A]n order appointing a receiver”
    is expressly made appealable. (Code Civ. Proc., § 904.1, subd. (a)(7), italics added;
    see id., § 904.2, subd. (h) [order “appointing a receiver” in a limited civil case is
    appealable].) Because “[a]n order refusing to appoint is not mentioned in the statute,” the
    extant authority suggests it “should be held nonappealable.”3 (9 Witkin, Cal. Procedure
    (5th ed. 2008) Appeal, § 177, p. 254, italics added; see City and County of San Francisco
    v. Shers (1995) 
    38 Cal.App.4th 1831
    , 1836 [citing 9 Witkin Cal. Procedure (3d ed. 1985)
    Appeal, § 99, p. 119, for proposition that order refusing to appoint receiver is not
    appealable]; Conaway v. Conaway (1963) 
    218 Cal.App.2d 427
    , 428 & fn. 1 [“it is
    questionable whether the order [denying a request to appoint a receiver] is appealable”].)
    3   In contrast, an order “refusing to discharge an attachment” and an order
    “refusing to grant or dissolve an injunction” are expressly made appealable. (Code Civ.
    Proc., §§ 904.1, subd. (a)(5)-(6) [unlimited civil cases], 904.2, subds. (f)-(g) [limited civil
    cases].) In addition, in an unlimited civil case, an order “refusing to change the place of
    trial” is separately appealable. (Code Civ. Proc., § 904.2, subd. (c).)
    5
    We need not decide whether the order denying the City’s request for appointment
    of a receiver is separately appealable. As noted ante, the trial court thereafter signed a
    written judgment dismissing the proceeding without prejudice. Therefore, we may
    review the interim order on appeal from the final judgment.4 (Code Civ. Proc.,
    §§ 581d, 904.1, subd. (a)(1), 906; see Eisenberg et al., Cal. Practice Guide: Civil Appeals
    and Writs (The Rutter Group 2018) ¶ 2:136, p. 2-86, ¶ 2:261, p. 2-161.) We deem the
    City’s prematurely filed notice of appeal to have been timely filed from the subsequent
    judgment of dismissal. (Cal. Rules of Court, rule 8.104(d); see Schneer v. Llaurado
    (2015) 
    242 Cal.App.4th 1276
    , 1283.)
    B.     The Court Exceeded the Scope of Its Authority Under Section 17980.7(c).
    The City contends the trial court erred by denying the motion for appointment of a
    receiver because it failed to address the requirements set forth in section 17980.7(c), and
    the court exceeded its authority by addressing the financial viability of the rehabilitation
    project.5 We agree.
    4 At oral argument, the City asked that we squarely address the question of
    whether an order refusing to appoint a receiver is separately appealable. But because we
    have already concluded we may review the interim order denying the City’s motion on
    appeal from the final judgment of dismissal, additional discussion of appealability will be
    unnecessary dictum. Therefore, we decline the City’s request. (See Lamden v. La Jolla
    Shores Clubdominium Homeowners Assn. (1999) 
    21 Cal.4th 249
    , 260 [declining to
    address in dictum application of inapplicable statute].)
    5 The trustee did not file a respondent’s brief. Therefore, we “may decide the
    appeal on the record, the opening brief, and any oral argument by the appellant.” (Cal.
    Rules of Court, rule 8.220(a)(2).) “Nonetheless, [the City] still bears the ‘affirmative
    burden to show error whether or not the respondent’s brief has been filed,’ and we
    ‘examine the record and reverse only if prejudicial error is found.’” (Smith v. Smith
    (2012) 
    208 Cal.App.4th 1074
    , 1078.)
    6
    “The appointment of a receiver rests within the discretion of the trial court.”
    (Gold v. Gold (2003) 
    114 Cal.App.4th 791
    , 807.) An order on a request for appointment
    of a receiver “will be reversed on appeal if there is a clear showing of an abuse of
    discretion.” (Ibid.) “An abuse of discretion is demonstrated if the court’s decision was
    not supported by substantial evidence or the court applied an improper legal standard or
    otherwise based its determination on an error of law.” (City of Crescent City v. Reddy
    (2017) 
    9 Cal.App.5th 458
    , 466, italics added.)
    Our determination of the proper scope of the trial court’s authority and inquiry
    under section 17980.7(c) is a matter of statutory construction we review de novo. (City
    and County of San Francisco v. Jen (2005) 
    135 Cal.App.4th 305
    , 310.) “The
    fundamental purpose of statutory construction is to ascertain the intent of the lawmakers
    so as to effectuate the purpose of the law. [Citation.] ‘We begin by examining the
    statutory language, giving the words their usual and ordinary meaning. [Citation.] If
    there is no ambiguity, then we presume the lawmakers meant what they said, and the
    plain meaning of the language governs. [Citation.] If, however, the statutory terms are
    ambiguous, then we may resort to extrinsic sources, including the ostensible objects to be
    achieved and the legislative history. [Citation.] In such circumstances, we “‘select the
    construction that comports most closely with the apparent intent of the Legislature, with a
    view to promoting rather than defeating the general purpose of the statute, and avoid an
    interpretation that would lead to absurd consequences.’”’” (Ibid.)
    7
    “As explained in [City of Santa Monica v. Gonzalez (2008) 
    43 Cal.4th 905
    ], when
    a building is maintained in a manner that violates state or local building maintenance
    regulations and ‘the violations are so extensive and of such a nature that the health and
    safety of residents or the public is substantially endangered’ (Health & Saf. Code,
    § 17980.6), the local enforcement agency may issue a notice and order requiring repair or
    abatement of the unlawful conditions. (Gonzalez, 
    supra,
     43 Cal.4th at pp. 919-920.) If
    the owner of the building thereafter fails to comply with the notice and order in a
    reasonable period of time, the enforcement agency can seek an order from the trial court
    appointing a receiver to oversee compliance. (Id. at p. 921.)” (City of Crescent City v.
    Reddy, supra, 9 Cal.App.5th at pp. 465-466; see § 17980.7(c).)
    Section 17980.7(c) has 15 subparagraphs, but only the first two address what the
    trial court must consider before appointing a receiver.6 First, “the court shall consider
    whether the owner has been afforded a reasonable opportunity to correct the conditions
    cited in the notice of violation.” (§ 17980.7(c)(1).) And last, “[t]he court shall not
    appoint any person as a receiver unless the person has demonstrated to the court his or
    her capacity and expertise to develop and supervise a viable financial construction plan
    for the satisfactory rehabilitation of the building.”7 (Id., subd. (c)(2).)
    6 The remaining 13 subparagraphs mostly address a receiver’s duties and powers.
    (See § 17980.7(c)(3)-(15).)
    7  In addition, section 17980.7(c)(2) provides that the court may appoint a
    nonprofit organization or community development corporation as a receiver, and it
    authorizes the organization or corporation to apply for grants to help pay for the
    rehabilitation of the building.
    8
    In its order denying the City’s request for appointment of a receiver, the trial court
    did not say it concluded the owner of the property was not given adequate notice and a
    reasonable opportunity to repair the building. Nor did the court say it concluded the
    proposed receiver lacked the expertise or capacity to develop and supervise a financially
    viable plan to rehabilitate the property. Instead, the court concluded the City had not
    presented any evidence that the plan itself was financially viable. “The margin on such a
    relatively small project, according to even a cursory estimate, . . . is small. Without a
    detailed, factually supported plan that shows the property can be rehabilitated without
    costing more than it can be sold for, the court cannot make the determination that
    rehabilitation is financially viable. Such a plan must necessarily begin with a
    construction plan/estimate. Without a detailed construction plan, it is not possible to
    determine the construction costs or value of the property post rehabilitation.”
    As indicated, ante, section 17980.7(c)(2) requires the trial court to inquire into the
    proposed receiver’s capacity and expertise to develop and supervise a financially viable
    plan. That subparagraph merely addresses the receiver’s qualifications. (See 7 Miller &
    Starr, Cal. Real Estate (4th ed. 2018) § 25:52, p. 25-245; Friedman et al., Cal. Practice
    Guide: Landlord-Tenant (The Rutter Group 2018) ¶ 3:72.4, p. 3-28.) It does not
    empower the court to determine for itself whether the property may, in fact, be
    rehabilitated in a financially sound manner or even to define what constitutes financial
    viability for the property. Indeed, on its face, the statute leaves open the possibility that a
    receiver may be appointed before the plan has been developed, meaning that in some
    cases there will be no financial and construction plan for the court to review at the time of
    9
    appointment. (§ 17980.7(c)(2); see id., subd. (c)(4)(C) [after appointment, receiver has
    the duty to “secure a cost estimate and construction plan from a licensed contractor for the
    repairs necessary to correct the conditions cited in the notice of violation”].) We decline
    to interpret section 17980.7(c) to include an additional requirement for appointment of a
    receiver that is not apparent on the face of the statute. (See City of Crescent City v. Reddy,
    supra, 9 Cal.App.5th at p. 467 [declining to interpret § 17980.7(c) as “requiring a trial
    court personally to visit real property prior to appointing a receiver” and “requir[ing] the
    court to make an express finding of danger prior to appointing a receiver”]; Code Civ.
    Proc., § 1858 [when construing statutes, job of court is to “declare what is in terms or in
    substance contained therein, not to insert what has been omitted, or to omit what has been
    inserted”].)
    Because the trial court applied an improper legal standard to the City’s motion for
    appointment of a receiver by not addressing the two requirements expressly stated in the
    statute and instead addressing an issue the statute does not empower the court to decide,
    we conclude the court abused its discretion. (City of Crescent City v. Reddy, supra,
    9 Cal.App.5th at p. 466.) Therefore, we reverse the judgment and remand for the trial
    court to reconsider the City’s motion and determine whether the requirements of
    section 17980.7(c)(1) and (c)(2) have been satisfied.
    10
    III.
    DISPOSITION
    The judgment is reversed, and the matter is remanded for further proceedings on
    the City’s request for appointment of a receiver. The City shall recover its costs on
    appeal.
    McKINSTER
    Acting P. J.
    We concur:
    CODRINGTON
    J.
    SLOUGH
    J.
    11
    Filed 12/19/19
    CERTIFIED FOR PARTIAL PUBLICATION*
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FOURTH APPELLATE DISTRICT
    DIVISION TWO
    ORDER
    CITY OF DESERT HOT SPRINGS,                         E071694
    Plaintiff and Appellant,
    v.                                                  (Super.Ct.No. PSC1802698)
    IRENE VALENTI et al.,
    Defendants and Respondents.                    ORDER CERTIFYING
    OPINION FOR PUBLICATION
    The court has reviewed a request filed December 16, 2019, to publish the
    nonpublished opinion filed in the above matter December 13, 2019. The request is
    GRANTED. The opinion meets the standards for publication as specified in California
    Rules of Court, rule 8.1105(c)(4), (6), and (7).
    IT IS SO ORDERED that said opinion be certified for partial publication pursuant
    to California Rules of Court, rule 8.1105(b).
    McKINSTER
    Acting P. J.
    We concur:
    CODRINGTON
    J.
    SLOUGH
    J.
    *Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
    certified for publication with the exception of part II.A.
    1
    

Document Info

Docket Number: E071694

Filed Date: 12/19/2019

Precedential Status: Precedential

Modified Date: 12/19/2019