Quick v. The Woman’s Club of >Hollywood>



















Filed 10/15/12 Quick v. The Woman’s Club of
Hollywood CA2/7

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>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.









IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND
APPELLATE DISTRICT



DIVISION
SEVEN




>

SUSAN QUICK, et al., Plaintiffs and Respondents, v. THE WOMAN’S CLUB OF HOLLYWOOD, etc. et al., Defendants and Appellants.

B233530 (Los Angeles County Super. Ct. No. BC446641)

APPEAL
from an order of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County. Ramona G. See,
Judge. Affirmed.



The
Law Office of Alda Shelton and Alda Shelton for Defendants and Appellants.



Harris
& Ruble, Alan Harris and Abigail Treanor for Plaintiffs and Respondents.



_____________________________



The Woman’s Club of Hollywood, California, Jennifer
Morgan, and Nina Van Tassell (collectively defendants) appeal from an order appointing
a receiver. We affirm.

FACTUAL & PROCEDURAL
BACKGROUND

The Woman’s
Club of Hollywood (the Club) is a href="http://www.adrservices.org/neutrals/frederick-mandabach.php">California
corporation which was founded in 1905.
According to its 2005 Bylaws, its object is the promotion of cultural,
civic and philanthropic interests. The
Club owns several parcels of real property.
The main lot is located on La Brea Avenue
in Hollywood and contains several
buildings, some of which are leased for residential purposes. Other parcels are located on Detour
Drive and Glen Holly Walk in Los
Angeles.

Plaintiffs
and respondents Susan Quick, Nadine Smith and Christine Zardeneta (collectively
plaintiffs) are members of the Club.
Quick joined in 1987, Smith joined in 1988, Zardeneta joined in 2010.

In October
2010, plaintiffs filed a complaint against the Club, Nina Van Tassell and
Jennifer Morgan.href="#_ftn1" name="_ftnref1"
title="">[1] The First Amended Complaint, filed November
2, 2010, alleged inter alia, that Morgan and Van Tassell became members of the
Club and thereafter called several unauthorized meetings and elections,
installing themselves as officers of the Club and undertook several ultra vires
actions for an improper, illegal and fraudulent purpose of destroying the Club
and taking over its assets for personal profit.
Plaintiffs alleged that these acts were href="http://www.fearnotlaw.com/">unfair business practices in violation of
Business and Professions Code sections 17200 et seq., and requested the
appointment of a receiver.href="#_ftn2"
name="_ftnref2" title="">[2]

On January 7, 2011, plaintiffs filed an
ex parte application for an order appointing a receiver. They submitted over 15 declarations
supporting the application which contained numerous allegations against Morgan
and Van Tassell, including that they did the following:

1. Held a series of meetings which were not
properly noticed or authorized by the Club’s bylaws;

2. Appointed themselves as Executive Director
and President of the Club, dismissing other existing directors;

3. Admitted new members without going through
the proper procedures;

4. Dismissed the club’s business manager,
changed the locks on the buildings and attempted to take possession of the
Club’s property;

5. Attempted to enact new bylaws without proper
notification of the membership and authorization;

6. Falsely represented to others that Hollywood
Heritage, a preservation organization, was going to take over the Club and
“planned to run it into the ground in order to declare Bankruptcy and then sell
the property”;

7. Attempted to change the tax status of the
corporation without approval from the membership;

8. Evicted long-term tenants of the property and
raised rental fees for remaining tenants;

9. Made plans to give one of the buildings away
to the City of Los Angeles without
proper authorization;

10. Allowed the property to lapse into disrepair,
failed to obtain proper insurance and necessary permits;

14. Authorized an inordinately high salary with
an expense account for Van Tassell;

11. Illegally used the Club’s petty cash
funds;

12. Hired their own staff and converted rental
property on the premises to an executive suite; and

13.
Applied for several bank loans without membership approval and without proper
authorization.

Plaintiffs
alleged that all of these actions were taken with the intent of selling the
Club’s property for redevelopment, in order to profit Morgan and Van Tassell.

The ex
parte application proposed that Stephen McAvoy be appointed as receiver.

On January
11, 2011, the court ruled there was good cause to grant the application for a
receiver, and prohibited defendants from any sale or alienation of Club assets,
or making any changes to the corporate status, structure or governance of the
Club until an election was completed in conformance with the 2005 Bylaws and
under the supervision of the receiver.
It requested that the parties submit a list of three potential
receivers.

On April 7, 2011, defendants filed an
opposition to the ex parte application on the basis that the Club had filed a
petition under Chapter 11 of the U.S. Bankruptcy Code on January 20, 2011.

Plaintiffs
and defendants submitted a Joint List of Three Potential Receivers on January 19, 2011. The names on the list were Evelyn Carlson,
Stephen Moses and Dennis Rook.

The
bankruptcy case was dismissed on April
13, 2011.

On April 26, 2011, the court signed an
order which had been jointly submitted by the parties, appointing Evelyn
Carlson as Receiver, preventing defendants from selling or alienating assets or
making changes to the Club’s corporate status until an election was held in
accordance with the bylaws. The receiver
was given the authority to hold an election on or after May 4, 2011.


Thereafter,
on April 26, 2011, defendants
filed an “Ex parte Application of Defendants . . . to Authorize Receiver to
Oversee Election. . . .” This document
stated, “pursuant to the Court’s order of January 11, 2011 appointing Evelyn Carlson as receiver,”
defendants requested an immediate order appointing Evelyn Carlson as the
receiver “to oversee an election of the Board of Directors of the Club by May 4, 2011 in conformance with the
2005 Bylaws.” The document also stated
that the parties agreed that Evelyn Carlson should be the receiver.

Defendants
filed their notice of appeal from the
order entered on April 26, 2011,
“appointing a receiver [] and issuing a mandatory and prohibitory injunction.”





>CONTENTIONS
ON APPEAL

Defendants
initially contend that Department 69 of the Los Angeles Superior Court had no
jurisdiction to appoint a receiver.
Next, they contend the order appointing the receiver was in fact a
preliminary injunction, and because plaintiffs did not comply with the
requirements for injunctive relief and
failed to state a valid cause of action in their complaint, there was no basis
for the court’s orders. Finally, they
claim that the injunction was in violation of the business judgment rule and
that the court had no jurisdiction to order the receiver to hold an election.

Plaintiffs
contend in their respondents’ brief that the href="http://www.mcmillanlaw.com/">opening brief should be stricken because
there is no statement of appealability.



DISCUSSION

1. Statement of Appealability

We first
address plaintiffs’ claim that the opening brief should be stricken for failure
to include a statement of appealability.

California
Rules of Court, rule 8.204(a)(2) provides that an appellant’s opening brief
must: “(A) State the nature of the action, the relief sought in the trial
court, and the judgment or order appealed from;
[¶] (B) State that the judgment
appealed from is final, or explain why the order appealed from is appealable.”

Plaintiffs
cite the case of Lester v. Lennane
(2000) 84 Cal.App.4th 536, an appeal filed from href="http://www.fearnotlaw.com/">temporary custody orders in a family law
case. There was no statutory or
constitutional basis for the appealability of those orders, and the court of
appeal observed that appellant “serves the question of appealability onto the
court’s side of the net and invites the court to undertake an independent
analysis of appealability.” (>Id. at p. 557.) The court of appeal recognized the unfairness
of dismissing the appeal, but noted that future failures to comply with the
requirement of a statement of appealability “may result in our striking of the
appellant’s opening brief.” (>Ibid.)

In their
reply brief, defendants concede that although there is no section entitled
“statement of appealability” in their opening brief, the brief refers to their
Notice of Appeal. The Notice of Appeal
states that the appeal is from an order appointing a receiver, citing Code of
Civil Procedure section 904.1, subdivisions (a)(7) and (a)(6), which provide
that an appeal may be taken from an order appointing a receiver and an order
issuing an injunction. In addition,
defendants’ opening brief describes in its introductory section that the order
appealed from is the order appointing Evelyn Carlson as receiver on April 26,
2011. It identifies three issues on
appeal, including: “Is the court’s April 26, 2011, order, which appoints Evelyn
Carlson as receiver to enforce an injunction and hold an election of
unspecified parties, an abuse of discretion?”
The other two issues on appeal concern the lower court’s jurisdiction to
make the order and to review a challenge to a corporate election. The following section, entitled “Standard of
Review” addresses the standard of appellate review of the three identified
issues.

Because the
appealability of an order appointing the receiver is specifically granted by
statute, and defendants specifically identified the order appealed from in
their opening brief and identified the statute which permits an appeal of that
order in their Notice of Appeal, we elect not to strike the opening brief and
proceed to determine the appeal on the merits.

2. Powers of Department 69

Defendants
contend that Department 69 of the Los Angeles Superior Court had no
jurisdiction to issue the receivership order because “Los Angeles Superior
Court Rule 2.6(7)(1)(H)(ii)” provides that motions for the appointment of a
receiver are assigned to Department 85 or 86.


Defendants
appear to be referring to Superior Court of Los Angeles County, Local Rules,
former rule 2.5(j) which provides that: “(2) In all civil actions that are
assigned for all purposes to an unlimited jurisdiction trial department in the
Central District, the following procedures are to be noticed and heard in
Department 85 or Department 86: . . .
(c) An application for the appointment of a receiver and all matters
pertaining thereto. . . .” (Adopted eff., Jan. 1, 1994, as amended, eff.
July 1, 2009, repealed July 1, 2011.)
However, the Superior Court of Los Angeles County court rules in effect
at the time this matter was filed also provide that: “A pro rata share of all
cases filed in or transferred to any district shall be assigned for all
purposes to each civil bench officer assigned to hear I/C cases [cases assigned
to an individual calendar] in that district.
. . . . [¶] (i)
Cases are assigned for all purposes, including trial. Except as the Presiding Judge may otherwise
direct, each Judge shall schedule, hear and decide all matters, including law
and motion, default prove-ups and minor’s compromises for each Case
assigned.” (Former Super. Ct. L.A.
County, Local Rules, rule 7.3.)href="#_ftn3"
name="_ftnref3" title="">[3]

As
indicated by the pleadings, this case was assigned for all purposes to Department
69 (the Honorable Ramona See), and thus that department had the authority to
hear the motion for an order appointing a receiver.

Defendants
also cite O’Flaherty v. Belgum (2004)
115 Cal.App.4th 1044 for the proposition that a court in one department of a
superior court cannot interfere with the exercise of jurisdictional power of a
department to which the proceeding has been assigned. The case, however, refers to the authority of the court which appointed a receiver
to determine all issues relating to the receivership. (Id.
at p. 1062.) Furthermore, >O’Flaherty specifically cites >Glade v. Glade (1995) 38 Cal.App.4th
1441, which provides that “Even though a superior court is divided into
branches or departments, pursuant to California Constitution, article VI,
section 4, there is only one superior
court in a county and jurisdiction is therefore vested in that court, not in
any particular judge or department.
Whether sitting separately or
together, the judges hold but one and the same court. [Citation.]
Because a superior court is but one tribunal, ‘[a]n order made in one
department during the progress of a cause can neither be ignored nor overlooked
in another department [Citation.] ‘“ . . . It follows, . . . where a proceeding
has been . . . assigned for hearing and determination to one department of the
superior court by the presiding judge. . . and the proceeding. . . has not been
finally disposed of . . . it is beyond the jurisdictional authority of another
department of the same court to interfere with the exercise of the power of the
department to which the proceeding has been so assigned. . . . If such were not the law, conflicting
adjudications of the same subject-matter by different department of the one
court would bring about an anomalous situation and doubtless lead to much
confusion.”’ [Citations.]” (Id.
at pp. 1449-1450, italics added.) It is
clear from a complete reading that O’Flaherty
v. Belgum does not stand for the proposition cited by defendants and that
jurisdiction to appoint a receiver is not vested in a particular department.

3. Jurisdiction to appoint a
receiver

Defendants
raise several issues with respect to the propriety of the order appointing the
receiver.

The
appointment of a receiver in this case is authorized under two statutes.

Code of
Civil Procedure section 564 provides that a receiver may be appointed, “by the
court in which an action or proceeding is pending, . . . in the following
cases: . . . (9) In all other cases
where necessary to preserve the property or rights of any party.”

Business
and Professions Code section 17203 provides that “the court may make such
orders or judgments, including the appointment of a receiver, as . . . may be
necessary to restore to any person in interest any money or property, real or
personal, which may have been acquired by means of such unfair competition.”href="#_ftn4" name="_ftnref4" title="">[4]

On appeal,
we will not reverse an order appointing a receiver unless there is a clear
showing of an abuse of discretion. (>Gold v. Gold Realty Co. (2003) 114 Cal.App.4th
791, 808; City & County of San
Francisco v. Daley (1993) 16 Cal.App.4th 734, 744.)

a. Judicial estoppel

We begin
with the claim made by plaintiffs in their respondents’ brief that defendants
are judicially estopped from objecting to the appointment of a receiver. “‘Judicial estoppel prevents a party from
asserting a position in a legal proceeding that is contrary to a position
previously taken in the same or some earlier proceeding.’” (Jackson
v. City of Los Angeles (1997) 60 Cal.App.4th 171, 181.) There are five requirements in applying the
doctrine of judicial estoppel: “‘“(1) the same party has taken two positions;
(2) the positions were taken in judicial or quasi-judicial administrative
proceedings; (3) the party was successful in asserting the first position
. . . ; (4) the two positions are totally inconsistent; and (5) the
first position was not taken as a result of ignorance, fraud, or
mistake.”’” (Jogani v. Jogani (2006) 141 Cal.App.4th 158, 169, quoting >Jackson, supra, at p. 183.)

In their
pleading filed April 26, 2011, defendants not only agreed that Evelyn Carlson
should be appointed receiver, they requested that the superior court order her
to immediately oversee an election.

Plaintiffs
argue that this pleading prevents defendants from objecting to the order on
appeal. Defendants contend in their
reply brief that they were simply agreeing to the appointment of Evelyn
Carlson, and that they still contest the power of the court to order the
appointment and to grant the receiver the authority to conduct an election and
to prohibit defendants from certain acts.

A close
reading of the April 26th pleading filed by defendants reveals that they
specifically requested that the court order Evelyn Carlson to oversee an
election. Because defendants were the
ones who moved for the ex parte order authorizing the receiver to oversee the
election and jointly submitted a proposed order appointing Carlson as a
receiver, they cannot now complain about the order appointing her and
authorizing her to conduct an election.

Although we
find that defendants are judicially estopped from objecting to the appointment
order to the extent it authorized Evelyn Carlson to conduct an election, we
nevertheless address defendants’ arguments about the propriety of the court’s
order and the powers it granted to the receiver.

b. Were plaintiffs entitled to an order
appointing a receiver?

The trial
court did not abuse its discretion in appointing the receiver because
plaintiffs followed the necessary steps in making their application.

A receiver
may be appointed “in all other cases where necessary to preserve the property
or rights of any party.” A motion for a
receiver can be brought “in an action 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 . . . is
probable, and where it is shown that the property or fund is in danger of being
lost, removed, or materially injured.”
(Code Civ. Proc., § 564, subds. (b)(1) and (b)(9).)

California
Rules of Court, rule 3.1175 provides that an applicant for an ex parte
appointment of a receiver must show in a verified complaint: “(1) The nature of
the emergency and the reasons irreparable injury would be suffered by the
applicant during the time necessary for a hearing on notice; [¶] (2) The names,
addresses, and telephone numbers of the persons in actual possession of the
property for which a receiver is requested, or of the president, manager, or
principal agent of any corporation in possession of the property; [¶] (3) The
use being made of the property by the persons in possession; and [¶] (4) If the
property is part of the plant, equipment, or stock in trade of any business,
the nature and approximate size or extent of the business and facts sufficient
to show whether the taking of the property by a receiver would stop or
seriously interfere with the operation of the business. [¶] If
any of the matters listed above are unknown to the applicant and cannot be
ascertained by the exercise of due diligence, the applicant’s declaration or verified complaint
must fully state the matters unknown and the efforts made to acquire the
information.”

California
Rules of Court, rule 3.1177 provides that “[a]t the hearing of an application
for appointment of a receiver on notice or at the hearing for confirmation of
an ex parte appointment, each party appearing may, at the time of the hearing,
suggest in writing one or more persons for appointment or substitution as
receiver, stating the reasons. A party’s
suggestion is without prejudice to its objection to the appointment or
confirmation of a receiver.”

Plaintiffs,
as members of the Club, established they were interested parties with a
probable right to the Club’s property, that there had been harm to the Club,
and that there was a danger that the Club’s property would be lost, removed, or
injured. They were thus entitled to
bring the application. Their application
and supporting declarations properly set forth the basis for the order and
provided a potential receiver’s name.
There was no abuse of discretion in granting the order appointing the
receiver.

c. Power of Receiver to hold an election

Code of
Civil Procedure section 568 provides the receiver has the “power to bring and
defend actions in his [or her] own name, as receiver; to take and keep
possession of the property, to receive rents, collect debts, to compound for
and compromise the same, to make transfers, and generally to do such acts respecting
the property as the Court may authorize.”


California
Rules of Court, rule 3.1179 provides that “The receiver is the agent of the
court . . . , and as such: [¶] (1) Is neutral; [¶] (2) Acts for
the benefit of all who may have an interest in the receivership property; and
[¶] (3) Holds assets for the court and not for the plaintiff or the defendant.”

“Typically,
. . . court rulings on receivership matters are afforded considerable deference
on review. [Citing cases which have
granted receiver powers to act in particular ways.] Such deference is the rule, even where the
court confirms extraordinary action by the receiver,
. . . .” (>City of Santa Monica v. Gonzalez (2008)
43 Cal.4th 905, 931 [concluding that the receiver has the power to approve a
receiver’s application to demolish a building].)

Article XI
of the Club’s 2005 Bylaws is entitled “Nominations and Elections” and provides
in pertinent part: “Section 3. The
Nominating Committee shall select one candidate for each office to be filled,
carefully studying their qualifications and capabilities for the office; each
of whom shall have consented to serve if elected. . . . [¶] Section 5. The Election Board shall at once have
prepared forms to be used at the election on which shall be placed the names of
all candidates for the Board and the Nominating Committee. In default of a candidate, or candidates, the
Election Committee shall complete the ticket, present one or more names for
each office. [¶] Section 6. Election shall be held at the Clubhouse on
the first Wednesday in May. The polls
shall be open from 10:00 a.m. to 3:00
p.m. All members in good standing shall
be entitled to vote. . . . [¶] Section 9.
A vacancy occurring in the office of the President or Vice-President
shall be filled by the plurality vote of the members present at a regular
meeting of the Club. Other vacancies
shall be filled by the President, with the approval of the Board.”

The January
2011 order appointing the receiver authorized an election in accordance with
the 2005 Bylaws. As indicated by
defendants in their April 26th pleading, the annual elections were scheduled to
be held in May 2011. Because there were
allegations that defendants had conducted elections at unauthorized times
without proper notice, the order authorizing the receiver to hold an election
on or after May 4, 2011, was within the broad scope of powers afforded by Code
of Civil Procedure sections 564 and 568 and within the scope of the Club’s
bylaws.href="#_ftn5" name="_ftnref5" title="">[5]

4. Preliminary injunction.

Defendants
contend that although plaintiffs based their ex parte application on the
receivership statute, what they obtained was an order for the receiver to
enforce a preliminary injunction, and thus plaintiffs “sidestepped the
requirement for obtaining a preliminary injunction” by not demonstrating a
probability of prevailing on the merits.


A
preliminary injunction is issued when a plaintiff presents evidence of
irreparable injury or interim harm that will occur if an injunction is not
issued pending an adjudication of the merits.
(Code Civ. Proc., § 526). There
must be a showing of a likelihood of success on the merits. (Cohen
v. Board of Supervisors (1985) 40 Cal.3d 277, 286.) In contrast, Code of Civil Procedure section
564 does not require that a plaintiff prove a probability of success on its
claim in order to secure the appointment of a receiver.

Although
the language in the order could be interpreted to be giving the receiver powers
to control the defendants’ actions, it was not automatically transformed from
an order authorized by Code of Civil Procedure section 564 et seq. to a
preliminary injunction. As discussed >ante, Code of Civil Procedure section
568 and Business and Professions Code section 17203 give the court the latitude
to grant extremely broad powers to the receiver.

“‘The
availability of other remedies does not, in and of itself, preclude the use of
a receivership. [Citation.] Rather, a trial court must consider the
availability and efficacy of other remedies in determining whether to employ
the extraordinary remedy of a receivership.
[Citation.]’ (>City and County of San Francisco v. Daley,
supra, 16 Cal.App.4th at p. 745.)” (>Gold v. Gold Realty Co., supra, 114
Cal.App.4th at p. 807.)

The order
appealed from prohibited sale of assets, or changes to corporate structure and
ordered the receiver to conduct an election in accordance with the Bylaws. Even though it contained language granting
the receiver powers to stop defendants’ actions, in essence, what it did was to
preserve the status quo. Since
defendants were allegedly transferring Club property, evicting tenants and
changing locks, the order was necessary to prevent them from doing so until a
properly noticed election was held.

Defendants
have not alleged that the order authorized the receiver to perform any duties
which are not in the best interest of the club or in bad faith. “Where there is no evidence of href="http://www.fearnotlaw.com/">fraud, unfairness, or oppression, the
court has wide direction in approving the receiver’s proposed actions. [Citations.]”
(City of Santa Monica, supra,
43 Cal.4th at p. 931.)

The order
provided that the receiver was empowered to prevent the sale or alienation of
the Club’s assets or from making any changes to the Club’s corporate
structure. It was well within the
superior court’s discretion to make the order.

5. Adequacy of complaint

Defendants
filed a demurrer to the First Amended Complaint on December 6, 2010. It is unclear from the record whether this
demurrer was ever ruled on. The
complaint was amended twice thereafter, but at the time the motion for receiver
was brought, the operative complaint was the First Amended Complaint.href="#_ftn6" name="_ftnref6" title="">[6]

Defendants’
contentions regarding the adequacy of the complaint, raised in their opening brief
filed February 16, 2012, are therefore not properly before this court since
they have only appealed from the April 26, 2011, order appointing the
receiver.



DISPOSITION

The order
appointing the receiver is affirmed.
Plaintiffs and respondents Quick, Smith, and Zardaneta shall recover
their costs on appeal from defendants and appellants Morgan and Van Tassell.







WOODS,
J.



We concur:







PERLUSS, P. J. JACKSON,
J.