United States District Court, S.D. California
ORDER GRANTING RECEIVER'S MOTION TO APPROVE SALE
OF REAL PROPERTY LOCATED AT 4205 LAMONT STREET, #12 [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
rental condominium located at 4205 Lamont Street #12, San
Diego, CA 92109 (“4205 Lamont”). On October 11,
2019, the Receiver filed the present Motion for Approval of
Sale of 4205 Lamont and Authority to Pay Broker's
Commission. ECF No. 84 (“the 4205 Lamont
Motion”). Chief Judge Larry A. Burns referred the 4205
Lamont Motion to the undersigned for a Report and
Recommendation, and the Court accordingly set a briefing
schedule and hearing on October 16, 2019. ECF No. 86. The
Court held the hearing on the 4205 Lamont Motion on December
5, 2019.See ECF Nos. 86, 154. On December
11, 2019, Chief Judge Burns granted the parties' Joint
Motion (ECF No. 156) to give limited consent to the
undersigned to hear and directly 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).
review of the relevant briefing and in consideration of 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 receiver's proposed alternative procedure
for the sale of real property because the alternative
procedure “ha[d] sufficient safeguards in order to
solicit the highest price that a willing buyer in an
arms-length negotiation will offer while conducting the sales
in a timely and cost-efficient manner that will maximize the
net sales proceeds.”).
sale of 4205 Lamont was well underway prior to the
Receiver's appointment in September 2019. Licensed broker
Pacific Sotheby's International Realty listed the
property for sale on May 14, 2019, and the property went into
escrow on August 10, 2019 with a purchase price of $409, 000
from buyer Misty Swetland (“Buyer”). ECF No. 84-1
at 2. Following her appointment and upon learning of the
pending sale, the Receiver reviewed automated valuation
scores for 4205 Lamont as well as the appraisal Buyer had
previously procured that appraised the property at a value of
$410, 000, leading her to conclude that the purchase price of
$409, 000 is fair and reasonable. Id. Consequently,
the Receiver and Buyer executed a First Amendment to
Residential Purchase Agreement and Escrow Instructions, which
made court approval of the sale a condition to closing and
provided for the overbid and auction process required by 28
U.S.C. § 2001(a). Id.; see also ECF
No. 84-3 at 26-32.
October 11, 2019, the Receiver filed the present Motion
seeking approval of the sale and proposing compliance with
the overbid and auction process by publishing the following
notice in the San Diego Union-Tribune once a week for four
In the action pending in U.S. District Court for the Southern
District of California, Case No. 19-CV-01628-LAB-AHG,
Securities and Exchange Commission v. Gina Champion-Cain, et
al., notice is hereby given that the court-appointed receiver
will conduct a public auction for the real property located
at 4205 Lamont Street, #12 in San Diego County, California.
Sale is subject to Court confirmation after the auction is
held. Minimum bid price is at least $419, 000. The auction
will take place on November 7, 2019 at 1:30 p.m. in front of
the entrance to the United States Courthouse, 221 W.
Broadway, San Diego, California. To be allowed to participate
in the auction, prospective purchasers must meet certain bid
qualification requirements, including submitted a signed
purchase and sale agreement, an earnest money deposit of $29,
550, and proof of funds. All bidders must be qualified by
5:00 p.m. PT on November 5, 2019, by submitting the required
materials to the receiver at 401 W. A Street, Suite 1830, San
Diego, California, 92101.
84-1 at 8. For those interested in qualifying as bidders, the
notice also provided a phone number and email address ...