Do You Need a Confirmation Hearing When a Receiver is Appointed Ex Parte?

Question: Do you need a confirmation hearing when a receiver is appointed ex parte and are there any exceptions?

Answer: Yes and no. In early practice in California, the appointment of a receiver on an ex parte basis was treated similar to an application for a temporary restraining order, pending the issuance of a preliminary injunction. As in that situation, where a plaintiff sought the appointment of a receiver on an ex parte basis, the appointment was only temporary, pending a hearing on an order to show cause why the appointment of the receiver should not be made permanent. As the court in Moore v. Oberg, 61 Cal. App. 2d 216, 220 (1943) stated, in dismissing an appeal of an ex parte order appointing a receiver, “It was only a temporary order and merely served as a notice of motion and a citation to the defendants to appear at a designated time to show cause why the motion should not be granted.” This procedure is now set forth in the California Rules of Court. Rule 3.1175 concerns the ex parte application for the appointment of a receiver. As a reminder, it requires that the ex parte application 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…(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 a trade of any business, the nature and appropriate 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 operations of the business.”

If a receiver is appointed ex parte, Rule 3.1176 then requires that there be a confirmation hearing and that the receiver’s appointment be confirmed. It provides, in subsection (a), “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.” Because the word “must” is used, a confirmation hearing is mandatory.

The Local District Court Rules for the Central District of California are similar. Local Rule 66-1 provides: “Upon good cause shown by verified pleadings or declaration, the Court may appoint a temporary receiver without notice to creditors.” However, Local Rule 66-3 goes on to provide that: “Concurrently with the appointment of a temporary receiver, the Court shall issue an order to show cause requiring the parties and the creditors of the defendant to show cause why a permanent receiver should not be appointed”. Local Rule 66-2, receiver shall not be appointed for a period longer than the next Motion Day following the expiration of twenty (20) days after the date of appointment.”

Therefore, to answer your question, yes you need a confirmation hearing and no there are not any exceptions. Indeed, because the receiver’s appointment is only temporary, unless the court for some reason extends the temporary appointment, it appears that a temporary receivership terminates after the period allowed for a temporary receiver under the rules.

Tags: Receiver


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