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2010 Receivership Rules of the Court

As promised, here are the Rules of the Court governing receivership:

Rule 3.1175. Ex parte application for appointment of receiver
(a) Application
In addition to any other matters supporting an application for the ex parte appointment of a receiver, the applicant must show in detail by verified complaint or declaration:
(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 a 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.

Rule 3.1176. Confirmation of ex parte appointment of receiver
(a) Order to show cause
Whenever a receiver is appointed without notice, the matter must be made returnable upon an order to show cause why the appointment should not be confirmed. The order to show cause must be made returnable on the earliest date that the business of the court will admit, but not later than 15 days or, if good cause appears to the court, 22 days from the date the order is issued.
(b) Service of complaint, order to show cause, declarations, and memorandum
The applicant must serve on each of the adverse parties:
(1) A copy of the complaint if not previously served;
(2) The order to show cause stating the date, time, and place of the hearing;
(3) Any declarations supporting the application; and
(4) A memorandum supporting the application.
Service must be made as soon as reasonably practical, but no later than 5 days after the date on which the order to show cause is issued, unless the court orders another time for service.
(c) Failure to proceed or serve adverse party
When the matter first comes on for hearing, the party that obtained the appointment must be ready to proceed. If that party is not ready to proceed or has failed to exercise diligence to effect service upon the adverse parties as provided in (b), the court may discharge the receiver.
(d) Continuance
The adverse parties are entitled to one continuance to enable them to oppose the confirmation. If a continuance is granted under this subdivision, the order to show cause remains in effect until the date of the continued hearing.

Rule 3.1177. Nomination of receivers
At 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.

Rule 3.1178. Amount of undertakings
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.

Rule 3.1179. The receiver
(a) Agent of the court
The receiver is the agent of the court and not of any party, 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.
(b) Prohibited contracts, agreements, arrangements, and understandings
The party seeking the appointment of the receiver may not, directly or indirectly, require any contract, agreement, arrangement, or understanding with any receiver whom it intends to nominate or recommend to the court, and the receiver may not enter into any such contract, arrangement, agreement, or understanding concerning:
(1) The role of the receiver with respect to the property following a trustee’s sale or termination of a receivership, without specific court permission;
(2) How the receiver will administer the receivership or how much the receiver will charge for services or pay for services to appropriate or approved third parties hired to provide services;
(3) Who the receiver will hire, or seek approval to hire, to perform necessary services; or
(4) What capital expenditures will be made on the property.

Rule 3.1180. Employment of attorney
A receiver must not employ an attorney without the approval of the court. The application for approval to employ an attorney must be in writing and must state:
(1) The necessity for the employment;
(2) The name of the attorney whom the receiver proposes to employ; and
(3) That the attorney is not the attorney for, associated with, nor employed by an attorney for any party.

Rule 3.1181. Receiver’s inventory
(a) Filing of inventory
A receiver must, within 30 days after appointment, or within such other time as the court may order, file an inventory containing a complete and detailed list of all property of which the receiver has taken possession by virtue of the appointment.
(b) Supplemental inventory
The receiver must promptly file a supplementary inventory of all subsequently obtained property.

Rule 3.1182. Monthly reports
(a) Content of reports
The receiver must provide monthly reports to the parties and, if requested, to nonparty client lien holders. These reports must include:
(1) A narrative report of events;
(2) A financial report; and
(3) A statement of all fees paid to the receiver, employees, and professionals showing:
(A) Itemized services;
(B) A breakdown of the services by 1/10 hour increments;
(C) If the fees are hourly, the hourly fees; and
(D) If the fees are on another basis, that basis.
(b) Reports not to be filed
The monthly reports are not to be filed with the court unless the court so orders.

Rule 3.1183. Interim fees and objections
(a) Interim fees
Interim fees are subject to final review and approval by the court. The court retains jurisdiction to award a greater or lesser amount as the full, fair, and final value of the services received.
(b) Objections to interim accounts and reports
Unless good cause is shown, objections to a receiver’s interim report and accounting must be made within 10 days of notice of the report and accounting, must be specific, and must be delivered to the receiver and all parties entitled to service of the interim report and accounting.

Rule 3.1184. 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.