Selected Issues in Taking, Holding and Enforcing Real Property
By Edythe L. Bronston
A. Status of Receiver: A receiver is
an agent of the court, acting for the court, holding assets in
custodia legis, generally to preserve the status
quo, but sometimes to maximize benefit to estate, depending on
the type of receivership. The receiver is neutral, represents
and is a fiduciary to all parties who are ultimately shown to
have interest in the property or fund which comprises the
receivership estate, or the proceeds of same. The receiver
obtains the right to possession of the property, but not
Receiverships are an ancillary remedy and are appointed only
where authorized by statute or equity. The statutory bases run
through the California Codes. Both the California Rules of
Court and the Local rules should always be consulted.
Where a complaint fails by its allegations
to show that the conditions required by law have been complied
with, an order appointing a receiver is void for all purposes.
In re Stein, 14 Cal.App.2d 303 (1936); Rondos v.
Superior Court, 151 Cal.App.2d 190 (1957)
Historically, imposition of a receiver has
been considered a harsh, expensive remedy. It is easier today
to obtain a rents, issues and profits receiver, but the court
always has discretion and will often balance the equities.
B. Appealability: CCP §904.1(a)(7);
City and County of San Francisco v. Shers, 38 Cal.App.
4th 1831 (1995)].
a. Order granting appointment: Appealable
under CCP §904.1(a)(7).
b. An order denying appointment is
c. An order refusing to vacate a prior
appointment is ordinarily non-appealable. (9 Witkin Cal.
Proc. (3rd. 1985) Appeal, §99, p.119).
d. An order discharging a receiver is
appealable when it has the effect of being a final judgment.
Hibernia S&L Soc. v. Ellins Estate Co., Cal. 216 Cal.
280, 281-282 (1932).
e. An order following a final appealable
judgment is appealable under CCP §904.1(a)(2) if the following
two requirements are met:
(1) Issues raised by appeal from order are
different from those arising from appeal from judgment; and
(2) The order must either affect the
judgment or relate to it by enforcing it or staying its
execution. Lakin v. Watkins Associated Industries, 604
Cal.4th 644, 651-652 (1993).
f. An order appointing a receiver in aid
of execution may be appealable as to the particular
There are many advantages to having a
receiver appointed, not the least of which is that the lender
is insulated from being deemed a mortgagee in possession. See
Civil Code §2938. This protects a lender from the increased
exposure of application of a prudent business standard and
responsibility for losses caused by the lender's negligence.
In addition, the receiver will ensure that the property is
insured and maintained and, in the case of a non-rents
receivership, that the business is appropriately operated. In
addition, a receivership order can specify that senior liens
are to be kept current and real property taxes paid. Further,
the lender will be kept informed as to the status of the
property or business.
Conversely, a receivership is an additional layer of expense
for which the lender may ultimately be held liable, should the
receivership estate be insolvent. Ephraim v. Pacific Bank,
129 Cal. 589, 592 (1900). In addition, should anything out of
the ordinary arise, a receiver will undoubtedly petition his
or her appointing court for instructions, which can lead to
delay and extra expense.
n.b.: Senate Bill 947, effective
January 1, 1997, repealed old Civil Code §2938 and added a new
Section 2938, which deals with perfection of a lender’s rights
to rents, issues and profits of real property, and also
addresses in Subsections (c) and (d) the rights of a
lender/assignee of rents to collect and receive rents, issues
and profits which have accrued but remain unpaid and
uncollected on the date on which an enforcement step is
taken. Those enforcement steps include appointment of a
receiver, obtaining possession of the rents, issues or
profits, delivery of a written demand to one or more tenants,
and delivery of a written demand to the assignor/borrower. The
statute, which applies to contracts entered into on or after
January 1, 1997, also provides that any of the enforcement
actions taken by a lender/assignee do not have the effect of
making that assignee a mortgagee in possession unless the
assignee obtains actual possession of the real property.
Further, rents collected under this statute may be received
and applied by the lender/assignee without the risk of a CCP
§726 violation. Be aware, however, that although “perfection”
protects the security interest against an intervening third
party, an additional enforcement step is mandated to allow the
creditor to begin collecting the assigned rents. Federal
National Mortgage Assn. V. Bugna, 57 Cal.App. 4th 5291
(1997). According to one California Appellate Court, enactment
of new Section 2938 did not alter existing California law in
that respect. Under new Civil Code §2938 (g) once a
lender has availed itself of these enforcement rights, the
borrower/assignor can demand that the rents be used for the
reasonable costs of protecting and preserving the property.
Lenders will probably want a receiver to oversee this process
. . . there is new statutory authority for appointment of such
a receiver pursuant to CCP §564(b)(11).
D. There are many different types of receiverships,
including the following:
1. Rents, issues and profits receiverships,
appointed under the specific performance provision of a deed
of trust or assignment of rents: CCP §564(b)(8);
Mines v. Superior Court, 216 Cal. 776 (1932).
2. To take possession of real property,
pending judicial foreclosure, where property is in danger of
being lost, removed, or materially injured, or conditions in
deed of trust or mortgage have not been performed, and
property is probably valued at less than the debt. CCP
a. Under CCP §564(b)(2), an entirely
different burden of proof is required, to show:
(1) That the real property is in danger of
being lost, removed, or materially injured; or
(2) That the loan is in default and the
property is probably insufficient to discharge the debt.
(a) Necessitates evidence of the property's
b. A lesser showing is required under
CCP §564(b)(8) than under (b)(2). By asserting the
provision in deed of trust or assignment, and the default, a
lender has established a prima facie, but
rebuttable right to areceiver. Barclays Bank v. Superior
Court, 69 Cal.App.3d 593, 602(1977); Santa Croce Bros.
v. Edgewater-Santa Clara, Inc., 242Cal.App.2d 584, 588
(1966). The creditor is not required to showthat property is
insufficient to discharge the debt. Appointment isalways
discretionary, however, and the recital in deed of trust or
assignment has evidentiary weight, but is not binding on
courts. Barclays Bank, supra, at p. 602.
3. In an action by a vendor to vacate a
fraudulent purchase of property, or by a creditor to subject
any property or fund to the creditor’s claim, or between joint
owners of property, where the party’s right or interest is
probable and the property or fund is in danger of loss,
removal or material injury. CCP §564(1).
4. To preserve community property
subject to a marital dissolution; Family Code §290..
5. To preserve property, pending a
corporate dissolution; Corporations Code §§ 1801(e),
1803; CCP§§564(b)(5), 565.Upon dissolution, to take
charge of the estate and collect the debts and property due
and belonging to the corporation , pay the outstanding debts
and divide the monies and property remaining among the
6. To preserve property pending a
partnership or joint venture dissolution. CCP
§564(b)(1); Corporations Code §15028.
7. In an unlawful detainer action. CCP
8. To enforce a judgment. CCP
a. To dispose of property according to a
judgment or to preserve it during the pending of an appeal.
b. To collect, expend, and disburse rents
during redemption period following judicial foreclosure.
CCP §§564(b)(4); 729.090(a).
(1) During the redemption period, a
receiver may be appointed to collect rents, but may not take
possession, as the mortgagor/trustor retains the right to
possession until the end of the statutory redemption period.
c. To collect accounts receivable.
9. At the request of the Office of
Statewide Health Planning & Development, or the
Attorney General, pursuant to Section 436.222 of the
Health and Safety Code. CCP §564(b)(7).
10. At the request of the Public
Utilities Commission pursuant to Section 855 of the Public
Utilities Code. CCP §564(b)(7).
11. In an action by a secured lender for
specific performance of an assignment of rents provision in a
deed of trust, mortgage, or separate assignment; the
appointment may be continued after entry of a judgment, if
appropriate to protect, operate or maintain real property
encumbered by the deed of trust or mortgage or to collect the
rents therefrom during the pendency of a nonjudicial
foreclosure sale. CCP §564(b)(10).
12. General Equity Receivers.
This type of receivership is totally
different from a rents, issues and profits receiver. An equity
receiver is generally appointed in connection with an action
brought by a governmental regulatory agency. The receiver will
take possession of all assets, for the benefit of all parties
ultimately shown to have an interest in those assets. This
type of receiver can be likened to a bankruptcy trustee, who
preserves and generally liquidates a pool of assets. A very
high burden of proof is required to obtain this type of
appointment. Creditors of a defendant whose assets become part
of the receivership estate are generally stayed by an
injunction which is issued by the appointing court as part of
the appointing order. The appointing order should be recorded
in all counties where real property is located.
13. Environmental Remediation Receiver.
To enter upon and inspect real property
security on behalf of a lender, to determine the existence of
hazardous materials, upon reasonable notice. CCP
§564(c); Civil Code § 2929.5. As the receiver has
no authority to do anything but investigate, it is
questionable whether there is sufficient benefit to justify
Practice Tip: If
representing a lender, the loan documents should include as an
event of default, triggering appointment of a receiver, any
breach of various environmental provisions, regardless of the
existence of a monetary default. Documents should further
provide that a lender may seek appointment of a receiver under
CCP §564(b)(8) to operate and manage the property, take
custody of all accounts, spend rents to abate the problem, and
take any other necessary action to enforce compliance with the
environmental provisions, including negotiating with
governmental authorities. The receiver can thus have authority
to incur the risks and obligations ordinarily incurred by
owners of the property without any personal obligation.
If plaintiff/lender wishes the receiver
to undertake to operate a contaminated property, the receiver
will undoubtedly demand a broad indemnification from the
lender, despite the new CERCLA secured creditor exemption/EPA
rules. [42 USC §9601 (20)(E)]. This may result in an inherent
conflict. The receiver should petition the Court for
instructions, on notice to all creditors.
14. Take charge of fraudulently
transferred property. Civil Code §3439.07(3)(B).
15. Federal Receiverships.
Federal receiverships may impose a higher
burden of proof. Factors include adequacy of security and
financial position of mortgagor. N.Y. Life v. Watt West
Investment, 755 F.Supp. 287 (E.D. Calif. 1991);
Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc., 999
F.2d 314 (8th Cir. 1993).
Federal law mandates that a receiver
appointed in any court of the United States must manage and
operate the property in his or her possession as receiver
according to the requirements of the valid laws of the state
in which such property is situated, in the same manner that
the owner or possessor thereof would be bound to do if in
possession thereof. 28 U.S.C. §959(b). Note that a
federal receiver may be sued without permission of the
receivership court, with respect to any acts or transactions
in carrying on business connected with the receivership
property. 28 U.S.C. §959 (a)
D. Powers of a Receiver.
A receiver’s powers are defined by statute,
by the appointing order and by subsequent orders on petitions
for instruction. Because a receiver’s decisions are backed by
the authority of the appointing court, a receiver should be
chosen with care, as it is always more difficult to address
the effect of acts already concluded. The receiver’s powers
may include (C.C.P. §568):
a. Bringing and defending actions;
b. Investigating and bringing property into
(1) May bring a party before court for
c. Collecting rents, collecting and
compromising debts, making transfers, doing any acts as court
d. Selling real or personal property of the
receivership estate (CCP §568.5).
(1) A receiver is not bound by Commercial
Code standards in selling personal property.
(2) Security Pacific National Bank v.
Geernaert, 199 Cal.App.3d 1425, 248 Cal.Rptr. 712 (1988):
UCC §9504 applies onlywhere sale of collateral is by secured
party, not where sale ismade by court-appointed receiver.
(3) In the absence of a statute providing
otherwise, a court mayauthorize a receiver to sell
receivership property at either a private or public sale.
People v. Riverside University. 35Cal.App. 3d 572, 583;
111 Cal. Rptr. 68 (1973).
(4) Since the court may authorize private
sales in the first instance, it has the power to approve sales
so made withoutprior authorization. (Id., at p. 586).
e. Where appointment is made pursuant to a
contractual provision, the scope is delineated in that
f. Query whether a receiver can usurp an
owner's position on the Board of a homeowners' association. A
cautious receiver will routinely obtain a court order prior to
doing any acts which may be found at all questionable.
F. Qualifications of a Receiver (CCP
1. Not a party, attorney of a party , or
person interested in action or related to any judge by
consanguinity within the third degree, without written consent
of the parties.
2. An individual, not a corporation.
3. Reviewed under an abuse of discretion
standard. City and County of San Francisco v. Daley, 16
Cal.App.4th 734, 744 (1993).
G. Appointing Orders (Check Local
Rules and California Rules of Court).
The appointing order establishes the
parameters of a receiver's duties and powers. The ultimate
goals and any special circumstances should be considered by a
plaintiff in drafting the order. It is recommended that a
draft of the order be submitted to both the client and the
proposed receiver for comments.
All loan documents should be carefully
reviewed prior to drafting a complaint and motion for
appointment of receiver, especially regarding notice
requirements contained therein. Orders should include
1. Take possession of books and records
(both in hands of defendant and third party);
2. Collect sums owing or coming due to
3. Enter into contracts and agreements
necessary to maintain and preserve property;
4. Employ eviction service, without further
order, to pursue unlawful detainer action;
5. Open bank accounts;
6. Pay obligations of receivership estate;
7. Sell real or personal property (if loan
documents allow and if circumstances so warrant), subject to
confirmation by the court;
8. Employ specific agents, employees, and
professionals (if warranted);
9. Institute and defend actions, upon court
10. Operate business at a loss, if
appropriate; in such a case, Order should address
responsibility for financing;
11. Address tenant issues:
a. tenant improvements
b. leasing commissions
c. Dover/subordination issues
12. Extend time for filing of inventory
beyond statutory 10-day period.
The Order should also include:
a. Complete description, common and legal,
of real property;
b. Instructions to receiver as to retention
of excess funds;
c. A provision authorizing receiver to turn
over real property (i) upon foreclosure, to the successful
bidder, upon receipt of a copy of a trustee’s deed; (ii) upon
notice of cure of default or notice that plaintiff has
accepted a deed in lieu of foreclosure; or (iii) upon receipt
of a copy the of dismissal of the complaint. See Los Angeles
Superior Court Rule 9.53, 9.54.)
d. A method for determining receiver's
e. A provision directing receiver to file
bond as set by court.
H. Expenses of Receiver
CCP §568: A receiver's powers include
the right to make transfers and do such acts as the court may
authorize respecting property in receivership estate. These
powers include the right to borrow money and issue receiver's
certificates to carry out the primary object of the receiver's
appointment; i.e., the care and preservation of the property.
Title Ins. etc. v. California Dev. Co., 171 Cal. 227,
1. Receivers often need to borrow money to
operate a receivership estate. Usually, however, the present
lender is the only source. Lenders should either obtain a
receiver's certificate or an order deeming an advance under
its deed of trust as obligatory, to ensure priority of such
2. Requires notice to all entities which
might have an interest in the property, including mechanics'
a. Pull title report and do a UCC search,
to ensure proper notice.
3. A receiver's certificate is evidence of
a receiver's debt, backed by all assets of the receivership
estate and by the court; Gardner v. Grand Beach Co.,
48 F.2d 491 (1931); Atlantic Trust Co. v. Chapman, 208
U.S. 360, 28 S.Ct. 406 (1902).
a. Requires court authorization, after
b. In the nature of an administrative
claim. Shares first priority position, pro rata
with expenses of receivership estate, securing loan with all
assets of receivership estate.
c. Takes precedence over all existing
unsecured debt. Analogous to administrative claim in
d. Court can actually order that receiver's
certificates take priority as a senior lien on specific
property (Title Ins. v. Calif. Dev., supra).
Presumably, in such a case, a lender can obtain title
insurance to ensure that position, provided that there is
evidence of proper notice.
(i) Requires full notice.
(ii) Very unlikely, if present secured
creditors object, unless court can be convinced that such a
“priming” lien is protecting the interests of the senior
4. Advances under present loan documents.
a. Not recommended unless loan can be
assured of priority as an obligatory advance. Consider moving
for an order declaring such an advance to be obligatory.
b. A good tactic, if there are potential
priority claims against the property, e.g., mechanics' liens.
(i) Some courts are refusing to authorize
payment of receivership expenses unless a receiver's
certificate has been issued.
I. Priority of receiverships and
competing rights to rents, issues and profits.
1. Where a junior lienholder has obtained a
receiver, the benefit runs to the senior, once the senior's
lien has been clearly asserted. Lovett v. Point Loma
Development, 266 Cal. App.2d 70 (1968). (Until then,
junior lienholder can keep rents under its own rents, issues
and profits clause). See new Civil Code §2938(h), which
codifies this holding as to contracts entered into after
January 1, 1997.
2. Sumitomo Bank of California v. Davis,
4 Cal.App.4th 1306; 6 Cal.Rptr. 381 (1992).
a. State court not bound by federal court's
denial of receiver in connection with judicial foreclosure of
third deed of trust.
b. Senior lender entitled to appointment of
state court receiver in connection with judicial foreclosure
of first deed of trust.
3. A court may order a receiver to make
regular payments to a senior lienholder. Lovett v. Point
Loma Dev. Corp., 266 Cal.App.2d 70 (1968).
1. Receiver is agent of the Court, not
the Plaintiff, and must maintain the property to the benefit
of all who may show themselves to have an interest.
2. Goal is to preserve status quo or
maximize return to estate and not to benefit any party while
action is pending.
3. Receiver may not utilize Plaintiff's
counsel. CRC, Rule 353(b). Note, however, that some
courts are allowing plaintiff’s counsel to file a receiver’s
final report and account, so long as the receiver files a
declaration with the final report and account, connoting
personal knowledge and under penalty of perjury.
4. Receiver's counsel may not be
compensated by receivership estate without prior court
authorization of employment; where an appointing order or
local rule allows for payment of all expenses of the
receivership estate upon notice to interested parties, payment
can be made to all employed professionals, but final approval
of fees is required, after submission by noticed fee
application. CRC, Rule 353(d).
5. Query whether Plaintiff has duty of
inquiry re proposed receiver's character and competence.
1. 11 U.S.C. §543 requires
turnover of property held by custodian.
2. Section 543(d) exception
authorizes custodian to remain in possession of property if in
best interest of creditors.
3. Policy of Office of United States
a. Trend in Central District is to oppose
all Section 543(d) motions and to oppose appointment of
receiver as Chapter 11 Trustee.
4. Once a bankruptcy has been filed, a
receiver should turn over property to the bankruptcy estate
unless the receiver is told by the plaintiff that an
application for an order shortening time to hear a Section
543(d) motion is being immediately made. The receiver should
not expose himself or herself to potential liability to the
bankruptcy court. The receiver should confirm in writing to
all interested parties that he/she has been requested by the
plaintiff to retain possession of the property, as the
plaintiff is making an ex parte application for
an order shortening time for hearing under Section 543(d). In
such a case, the receiver should not wait longer than one week
to turn over property, if the ex parte application has
not been made.
5. After turnover, the receiver should make
a motion in Bankruptcy Court for approval and payment of his
or her fees under 11 U.S.C. §543(c)(2).
L. Impact of One Action Rule: CCP §726
1. CCP §564 was amended in 1992,
adding subsection (d) which provides that any action by a
secured lender does not constitute an action within the
meaning of Section 726(a).
2. Prudent course is to forego payover of
rents collected until receivership has been terminated and
receiver's final report and account has been approved. (See
discussion in point C, at page 3, however, regarding new Civil
Code §2938, effective as to contracts entered into on or after
January 1, 1997.)
3. Omission of Rents, Issues & Profits
Provision. If a security instrument lacks a rents and
profits clause, a receiver appointed under CCP §564(b)(2) may
be limited to preserving the property from waste and may not
be entitled to claim rents except as needed to avoid waste,
since the right to rent and the right to title are different
interests. Walmsley v. Holcomb, 61 Cal.App.2d 578
(1943). Without a rents, issues and profits clause, therefore,
rents from real property are treated as a separate and
unencumbered asset. Snyder v. Western Loan & Building Co.,
1 Cal.2d 697 (1934). Even a stipulation in the security
instrument providing for a receiver upon default is of little
help without a rents, issues and profits clause, as courts
have held that jurisdiction to appoint a receiver cannot be
conferred by consent. Baker v. Varney, 129 Cal. 564
(1900); Barclays v. Superior Court, 69 Cal.App.3d 593
M. Characterization and Collection of
1. Rarely, if ever, available.
2. Borrowers will attempt to replenish
security deposit account from lender's rents. Receiver should
3. Borrowers have personal liability to
both residential and commercial tenants if
security deposits are not returned to tenant or transferred to
receiver within a reasonable time after receiver's
appointment. CC §1950.5(g); §1950.7(d).
4. A commercial tenant's claim to a
security deposit is senior to the claim of any of the
landlord's creditors, except a trustee in bankruptcy.
5. Upon receipt of security deposits,
receiver has all rights and obligations of the landlord with
respect to the payment or deposit. CC §1950.7(e)
6. Lenders should request an accounting
from date of default, in order to ascertain status of security
7. Where a borrower fails to comply with a
TRO mandating turnover of security deposits in borrower’s
possession, the receiver has the burden to demonstrate
Defendants’ ability to comply. If that burden is not met,
there is no support for a contempt order. Cassil v.
Superior Court of L.A. County, Clayton R. Cook, Real Party
in Interest), 37 Cal.App.4th 1081, 44 Cal.Rptr. 2d 267 (1995)
Receiver should petition appointing court for authority to
take deposition and take deposition prior to filing an order
to show cause re: contempt; otherwise, borrower may assert 5th
Amendment right against self-incrimination.
N. Use of Rents by Receiver.
1. Rents Collected Should be Held.
To be safe, funds collected by a receiver should be left in
the receiver's hands and unapplied to the debt pending
foreclosure, unless all debtors and junior lienholders have
expressly consented in writing to a different treatment of the
a. If the receiver’s appointing order
authorizes or mandates his or her payment to a lender from
rents collected, the receiver has no liability for any damages
caused to such lender by application of the rents, since the
receiver is operating under a court order.
b. See new Civil Code §2938: for deeds of
trust executed after January 1, 1997, there is no CCP §726
violation for application of rents to debt.
2. Special Circumstances
a. Contaminated sites. Query
whether a receiver may use rents collected to clean up a
contaminated site pre-foreclosure? Receivers should be
extremely cautious to ensure that their appointing order
expressly provides for such expenditures and further provides
that the receiver has no personal liability. A wise receiver
will insist upon employment of counsel for advice in such
circumstances. (Loan documents should be carefully reviewed
to ensure that the appointing order does not go beyond the
scope of the lender's rights.)
O. Receiver's Privileged Communications:
Communications between receiver and counsel are presumed
confidential. The attorney-client privilege is broad enough to
protect the receiver even from appointing judge. Shannon v.
Superior Court of Stanislaus County, 217 Cal.App.3d 986,
266 Cal.Rptr. 242 (1990).
P. Termination of Receivership
1. Court order required. Check Local
2. Final report and account must be
approved and bond exonerated.
a. Ten days written notice to all parties
(Rule 353(d), California Rules of Court). n.b. - the
Los Angeles Superior Court has required an additional five
days for mailing.
b. Services performed and fees requested
must be itemized. Hozz v. Varga, 166 Cal.App.2d 539
c. Upon court approval of the receiver's
final report and account, the receiver will be discharged and
his or her bond exonerated.
d. Effect of court order:
(1) Bars subsequent action against
receiver, by all parties who received notice,
for Receiver’s failure to properly perform duties. Aviation
Brake Sys. Ltd. v. Voorhis, 133 Cal.App.3d 330, 183
Cal.Rptr. 766 (1982).
Q. Effect of Receiver's Acts Upon
1. Appointment of a receiver does not
make a mortgagee/beneficiary a mortgagee in possession.
Bank of Am. Nat’l Trust & Sav. Ass'n v. Bank of Amador County,
135 Cal.App. 714 (1933); rather, the imposition of a receiver
protects a lender from such a risk.
2. Conversely, a receiver's misconduct does
not result in liability to a beneficiary/mortgagee. Tourny
v. Bryan, 66 Cal.App. 426 (1924).
R. A Receiver's Risks
A receiver's immunity from liability to
a bankruptcy estate has been held to depend upon the totality
of circumstances in which an order is drawn. In the case of
In re Sundance Corp., Inc., 149 B.R. 641 (Bkrtcy.E.D.Wash.
1993), a mortgagee's successor in interest and the
mortgagor's stockholders objected to a receiver's motion
brought in the mortgagor's Chapter 11 bankruptcy case for
approval of his accounting, termination and discharge of his
custodianship, exoneration of his bond, and fees and costs.
The objection was based upon an assertion that the receiver
was liable for clean-up costs in connection with release of
hazardous substances at the mortgagor's orchard. The court
stated that an order's immunizing power varies according to
the extent that a court is fully informed as to the nature of
the options available for its consideration, and that notice
and opportunity is given to interested parties to participate
in the decision-making process.
Using language which has undoubtedly struck
fear into the hearts of all receivers, with the result that
receivers should probably require a petitioning lender to
indemnify them for any such costs, the court stated:
"but if a receiver did not analyze the
risks inherent in the various known options and bring the
risks to the attention of the court and the parties for their
consideration in the decision-
making process, then the court order will
not provide immunity and a receiver will have to defend itself
on the merits on whether it acted with reasonable business
Cf. Gregory v. U.S., 942 F.2d 1498
(10th Cir. 1991), where it was held that a trustee was
entitled to absolute immunity for executing bankruptcy court
orders relating to collection and disposition of estate
While a trustee and a receiver have
different status, in that a receiver holds assets in
custodia legis, while a trustee does not, it would appear
that a receiver operating as a bankruptcy custodian should be
entitled to the same protections as a trustee in bankruptcy.
See also (1) New Alaska Development
Corp. v. Guetschow, 869 F.2d 1298, 1303-1305 (9th Cir.
1989), holding that a state court receiver is entitled to
“absolute derivative judicial immunity”, where a receiver is
acting in a normal receivership function, as the receiver is
an agent of the court; and (2) Credit Managers Association
v. Kennesaw Life and Acc. Ins., 25 F.3d 743,750-751 (9th
Cir. 1994), where the Ninth Circuit held that the general rule
in California is that a judgment against a receiver operates
only as an established claim against assets in the receiver’s
possession and is not enforceable by execution, but then
stated that a receiver can be held personally liable for his
misconduct or mismanagement of the receivership estate.
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