United States District Court, S.D. California
ORDER GRANTING RECEIVER'S MOTION TO APPROVE SALE
OF REAL PROPERTY LOCATED AT 1617 THOMAS AVENUE [ECF NO.
Honorable Allison H. Goddard United States Magistrate Judge
August 28, 2019, the Securities and Exchange Commission
(“SEC”) brought this action against Defendants
ANI Development, LLC (“ANI Development”) and Gina
Champion-Cain and Relief Defendant American National
Investments, Inc. (“ANI Inc.”), alleging
violations of federal securities laws based on a purportedly
fraudulent liquor license loan scheme. ECF No. 1. Along with
the Complaint, the SEC filed a Joint Motion and Stipulated
Request seeking a preliminary injunction, appointment of a
permanent Receiver, and other related relief (ECF No. 2),
which the Court granted on September 3, 2019. ECF No. 6
(“the Appointment Order”). In the Appointment
Order, the Court established an equity receivership,
appointing Krista Freitag as Receiver of ANI Development and
ANI Inc. and authorizing her to take control over all funds
and assets owned, managed, or in the possession or control of
the receivership entities. See Id. at 14-16.
Relevant here, the Receiver was granted full power over all
premises owned, leased, occupied, or otherwise controlled by
the receivership entities. Id. at 14.
October 3, 2019, the Receiver filed a Motion for Order in Aid
of Receivership (ECF No. 76), which included the
Receiver's Verified Initial Report. ECF No. 76-1 at
11-24. According to the Initial Report, the receivership
encompasses approximately 70 entities, including over 60 real
properties and operating businesses at the time of the
Receiver's appointment. Id. at 11. Attached to
the Report is a Preliminary Real Estate and Liquor License
Asset Schedule (ECF No. 76-2), which lists all premises
leased or owned by the receivership entities, including a
vacation home located at 1617 Thomas Avenue, San Diego CA,
filing the Motion for Order in Aid of Receivership, the
Receiver began filing motions seeking Court approval of
various real property sales, including the present Motion for
Order for Approval of Sale of Real Property Located at 1617
Thomas Avenue and Authority to Pay Broker's Commission
(“the 1617 Thomas Motion”), filed on November 4,
2019. ECF No. 100.
November 15, 2019, the Presiding Judge in this matter, Chief
Judge Larry A. Burns, issued a Minute Order stating in
The Court is inclined to refer certain other matters to
Magistrate Judge Allison Goddard to take evidence, if
necessary, and to submit to this Court a Report and
Recommendation with her findings and recommendations, with
regard to the proposed sale and management of properties and
assets and the allocation of proceeds from such sales.
113. Consistent with the Minute Order, on December 5, 2019,
Chief Judge Burns formally referred the 1617 Thomas Motion to
Judge Goddard, who held a hearing on the Motion the same
See ECF Nos. 135, 154.
on December 11, 2019, Chief Judge Burns granted the
parties' Joint Motion (ECF No. 156) to give limited
consent to the undersigned to decide all motions filed in
this action to approve sales of receivership assets. ECF No.
160. Consequently, this Order resolves the Motion directly
pursuant to the grant of limited consent rather than serving
merely as a report and recommendation to Chief Judge Burns.
See 28 U.S.C. § 636(c); CivLR 72.1(g).
reviewed the relevant briefing and considered the testimony
at the hearing, the Court GRANTS the Motion,
for the reasons explained more fully below.
is a recognized principle of law that the district court has
broad powers and wide discretion to determine the appropriate
relief in an equity receivership.” SEC v. Lincoln
Thrift Ass'n, 577 F.2d 600, 606 (9th Cir. 1978).
Where a district court sits in equity, “[u]nless a
statute in so many words, or by a necessary and inescapable
inference, restricts the court's jurisdiction in equity,
the full scope of that jurisdiction is to be recognized and
applied. ‘The great principles of equity, securing
complete justice, should not be yielded to light inferences,
or doubtful construction.'” Porter v. Warner
Holding Co., 328 U.S. 395, 398 (1946).
of its wide discretion, the district court sitting in equity
and having custody and control of property “has power
to order a sale of the same in its discretion. The power of
sale necessarily follows the power to take control of and to
preserve property[.]” SEC v. Am. Capital
Investments, Inc., 98 F.3d 1133, 1144 (9th Cir. 1996),
abrogated on other grounds by Steel Co. v. Citizens for a
Better Env't, 523 U.S. 83, 93-94 (1998) (quoting 2
Ralph E. Clark, Treatise on Law & Practice of
Receivers § 482 (3d ed. 1992)). If the court
approves an equitable receiver's proposed property sale,
the sale “does not . . . purport to convey
‘legal' title, but rather ‘good,'
equitable title enforced by an injunction against
suit.” Id. (citing 2 Clark, Treatise on
Law & Practice of Receivers, §§ 342, 344,
482(a), 487, 489, 491).
to 28 U.S.C. § 2001(a), realty in the possession of an
appointed receiver is subject to a public sale process,
“upon such terms and conditions as the court
directs.” 28 U.S.C. § 2002 further requires that
notice be published once a week for at least four weeks prior
to the sale in at least one newspaper regularly issued and of
general circulation in the county, state, or judicial
district where the realty is located. These safeguards of notice
and opportunity to submit overbids help to ensure that the
sale is able to fetch the best price possible, which is
consistent with the principle that “a primary purpose
of equity receiverships is to promote orderly and efficient
administration of the estate by the district court for the
benefit of creditors.” SEC v. Hardy, 803 F.2d
1034, 1038 (9th Cir. 1986). See also United States v.
Grable, 25 F.3d 298, 303 (6th Cir. 1994) (noting that
“the intent of” the requirement in 28 U.S.C.
§ 2001 that property be sold in the county in which the
land is situated is “to bring a better price at the
sale”); SEC v. Billion Coupons, Inc., No. CIV.
09-00068 JMSLEK, 2009 WL 2143531, at *3 (D. Haw. July 13,
2009), report and recommendation adopted, No. CIV.
09-00068JMS-LEK, 2009 WL 2365696 (D. Haw. July 29, 2009)
(approving a ...