UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA
May 10, 2011
JOE HAND PROMOTIONS, INC.,
ADNAN MOHAMMED SADDELDIN, ET AL.,
The opinion of the court was delivered by: Gary S. Austin United States Magistrate Judge
ORDER REGARDING PLAINTIFF'S MOTION FOR APPOINTMENT OF RECEIVER OF LIQUOR LICENSES PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 708.610 AND RULE 66 OF THE FEDERAL RULES OF CIVIL PROCEDURE (Document 25)
Plaintiff Joe Hand Promotions, Inc., a closed-circuit distributor of sports and entertainment programming, filed its complaint for violations of the telecommunication statutes (47 U.S.C. §§ 553 & 605) on December 18, 2009. Plaintiff had the exclusive commercial exhibition licensing rights to the Ultimate Fighting Championship 92: "The Ultimate 2008" (the "Program") which was broadcast on December 27, 2008. Plaintiff entered into sublicensing agreements with various commercial entities wherein payment of a commercial sublicense fee allowed for broadcast of the Program. ( See Docs. 1 & 17.)
Defendants Adnan Mohammed Saddeldin, Jay P. Ghazal and Allen Martin Ormonde are the alleged owners, operators, or licensees of the Samba Brazilian Steak House aka Samba Brazilian BBQ. On December 27, 2008, Plaintiff's investigator, Armando Torrez, observed the Program at their establishment in Fresno, California. However, Defendants had not obtained a sublicense from Plaintiff. (Doc. 17, 17-3.)
When Defendants did not answer or otherwise appear in this action following proper service *fn1 of Plaintiff's summons and complaint, the Clerk of the Court entered default against Defendants. (Doc. 13.) Thereafter, Plaintiff moved for default judgment on April 10, 2010. (Doc. 17.) On May 14, 2010, this Court issued Findings and Recommendations that Plaintiff's application for default judgment be granted. (Doc. 20.) No party filed objections. On June 16, 2010, the Findings and Recommendations were adopted in full. (Doc. 21.) Judgment was entered in favor of Plaintiff and against Defendants in the sum of $30,750.00. (Docs. 20-21.)
Plaintiff brings the instant motion requesting the Court appoint a receiver to take possession and sell Defendants' alcoholic beverage licenses to provide for payment of the judgment. (Doc. 25.) *fn2
Rule 69(a) of the Federal Rules of Civil Procedure governs the execution of final judgments and states that a "money judgment is enforced by a writ of execution . . . [and][t]he procedure on execution - and in proceedings supplementary to and in aid of judgment or execution - must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies." Fed.R.Civ.P. 69(a)(1). Thus, the Court must first determine whether a federal statute applies to an appointment of a receiver in aid of enforcing a judgment.
Rule 66 of the Federal Rules of Civil Procedure governs the appointment of receivers. *fn3
The Ninth Circuit has held that because "[t]he federal rules,
including Rule 66, qualify as federal statutes under Rule 69( a) [,] .
. . Rule 66 prevails over any state law to the extent it applies."
Office Depot, Inc. v. Zuccarini , 596 F.3d 696, 701
(9th Cir. 2010) (internal citations omitted). Notwithstanding, when
the federal statute is a general procedural rule, specific state
statutes addressing the particular procedure at issue apply.
See id . at 701- 703. Therefore, "'state law has been
applied under Rule 69(a) to . . . appointment of receivers,' when such
actions are undertaken in aid of executing a judgment."
Id . at 700. Because California has a specific statute
governing the appointment of a receiver of a liquor license, the court
looks to California law to determine whether Plaintiff is entitled to
have such a receiver appointed. See
Cal.Civ.Proc.Code § 708.630(a) ("The judgment debtor's interest in an
alcoholic beverage license may be applied to the satisfaction of a
money judgment only as provided in this section").
Under California law, the alcoholic beverage license of a judgment
debtor is subject to enforcement of a money judgment.
See Cal.Civ.Proc.Code §§ 708.630, 695.010(a), 699.710;
Office Depot, Inc. v. Zuccarini , 596 F.3d at 701.
"The court may appoint a receiver . . . where the judgment creditor
shows that considering the interests of both the judgment creditor and
the judgment debtor, the appointment of a receiver is a reasonable
method to obtain the fair and orderly satisfaction of the judgment."
Cal.Civ.Proc.Code § 708.620. However, when the receiver is appointed
for the purpose of transferring the judgment debtor's interest in an
alcoholic beverage license, California Code of Civil Procedure section
708.630 limits this power if "the judgment debtor shows in the
proceeding to appoint a receiver that the amount of delinquent taxes .
. . and claims of creditors with priority over the judgment creditor
exceed the probable sale price of the license." Id
. § 708.630(b).
Here, the Court finds that plaintiff has shown that appointment of a receiver of Defendants' alcoholic beverage licenses is a reasonable method to obtain satisfaction of the judgment. Plaintiff represents that following entry of judgment, it has sent post-judgment discovery to Defendants in an attempt to obtain payment to satisfy the judgment. (Doc. 25-2 at 5.) Defendants have ignored these discovery requests and have refused payment of the judgment. ( Id .) Plaintiff consulted the License Query System website maintained by the California Department of Alcoholic Beverage Control and identified two licenses:
1. License Number 432464
Primary Owner: Brazilian BBQ, Inc.
Business Name: Samba Brazilian BBQ, Inc.
Company Officer Information: Adnan Mohammed Saddeldin, director or general manager; Jay P. Ghazal, president/treasurer; and Allen Martin Ormonde, secretary.
2. License Number 310166
Primary Owner: Jay P. Ghazal Business Name: By the Sea Licensee
Information: Jay P. Ghazal
( See Doc. 25-3 at 18-22.) Plaintiff's counsel
also avers that based on his experience, "installing a keeper at
Defendants' place of business would be [a] burdensome and expensive"
alternative to collection on the liquor licenses. (Doc. 25-2 at 5.)
Finally, Defendants have failed to respond to any of Plaintiff's
motions, including the instant motion. Accordingly, this Court finds
that, considering the interests of both parties, Plaintiff is entitled
to have a receiver appointed to take possession and control of
Defendants' alcoholic beverage licenses, numbers 432464 and 310166.
See J & J Sports Prods., Inc. v. Bachman , 2011 WL
1376605 (E.D. Cal. Apr. 12, 2011); J & J Sports Prods., Inc.
v. Huezo , 2011 WL 1134265 (N.D. Cal. March 25, 2011).
In sum, Plaintiff has shown the appointment of a receiver is a reasonable method to obtain satisfaction of its judgment.
For the foregoing reasons, IT IS HEREBY ORDERED that:
1. Plaintiff's motion for appointment of a receiver in aid of enforcement of judgment is GRANTED;
2. The Court appoints ROBERT A. HAWKINS, JAMES E. SALVEN, or SHERYL A. STRAIN as receiver to perform the duties and responsibilities set forth in this Order and whom shall be compensated at the expense of Defendants, by a percentage to be determined based upon the amount recovered from the sale of the alcoholic beverage licenses;
3. The receiver shall have the following duties and powers pursuant to Rule 66 of the Federal Rules of Civil Procedure and California Code of Civil Procedure section 708.630:
A. To take possession and control of Defendants' alcoholic beverage license bearing the number 432464 in accordance with the California Business and Professions Code and applicable regulations of the California Department of Alcoholic Beverage Control;
B. To take possession and control of Defendant Jay P. Ghazal's alcoholic beverage license bearing the number 310166 in accordance with the California Business and Professions Code and applicable regulations of the California Department of Alcoholic Beverage Control;
C. To file with the California Department of Alcoholic Beverage Control the surrender of the alcoholic beverage licenses under Title 4 of the California Administrative Code section 65;
D. To retain the services of a business opportunity broker, if necessary, to place the alcoholic beverage licenses on the market for purposes of a competitive sale;
E. To retain the services of an attorney and an accountant, if necessary, to aid and assist in the sale of the alcoholic beverage licenses;
F. To proceed with the sales, pay any priority tax liens, if at all, distribute the balance of the funds to Plaintiff first, and thereafter to other creditors, if any;
4. Defendants are restrained from:
A. The sale, transfer, or other disposition of the licenses; and
B. Any act to interfere with the receiver's efforts to sell the licenses.
IT IS SO ORDERED.