KHMER BUDDHIST ASSOCIATION v. DAVID PASTERNAK

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Court of Appeal, Second District, California.

KHMER BUDDHIST ASSOCIATION et al., Plaintiffs and Appellants, v. DAVID PASTERNAK, as Receiver, etc. et al., Defendants and Respondents.

B228019

Decided: October 24, 2011

Law Offices of Stroud & Do, James T. Stroud, and Van T. Do for Plaintiffs and Appellants. Pasternak, Pasternak & Patton and John W. Patton, Jr., for Respondent David J. Pasternak, as Receiver. No appearance for Defendant and Respondent Larry Sar.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

INTRODUCTIONFACTUAL AND PROCEDURAL BACKGROUND2

In February 2008, appellants filed a complaint seeking, inter alia, a judicial determination as to who was entitled to be a director of KBA. Following numerous hearings, the trial court entered an order pursuant to an oral stipulation and entered another order appointing a receiver to enforce the stipulation.   We reversed both orders and instructed the trial court to terminate the receivership upon the filing of the remittitur by issuing appropriate instructions, including instructions regarding the receiver's final account and report pursuant to California Rules of Court, rule 3.1184.

Following the issuance of the remittitur, appellants filed motions to disqualify the trial judge pursuant to section 170.6.   The receiver filed a final report and account and sought an order terminating the receivership.   The receiver explained that he had been appointed receiver of KBA in a separate action and therefore asked that any funds remaining in the receivership estate following the payment of his administrative expenses be disbursed to the new KBA receivership estate.   Appellants objected to the final report, arguing, as they do here, that the appointment of the receiver was void ab initio.

At a hearing conducted on September 30, 2010, the trial judge rejected appellants' motion to disqualify him, reasoning that he was not hearing a new matter but was merely administering the order of this court.   The trial judge rejected appellants' objection to the receiver's final report on the basis that he was merely acting in accordance with our instructions.   The court therefore entered an order approving the receiver's final report and account and authorizing the receiver to pay his fees and costs from the receivership estate.   Appellants timely appealed.

DISCUSSION

I. Compensation of Receiver

Appellants contend that our reversal of the order appointing the receiver rendered the appointment void ab initio and that the order allowing compensation for the receiver's costs accordingly is void.   We conclude that our reversal of the order appointing the receiver did not render the appointment void ab initio.   Unlike the cases on which appellants rely, the reversal was not based on the merits of the appointment itself but was required only because we reversed the order enforcing the stipulation.   The initial appointment of the receiver therefore not being void, the trial court on remand was authorized to terminate the receivership and order compensation for the receiver's costs.

Appellants cite Sullivan v. Gage (1905) 145 Cal. 759 (Sullivan ), disapproved on another ground in Metropolitan Water Dist. v. Marquardt (1963) 59 Cal.2d 159.   In Sullivan, after the California attorney general obtained a judgment dissolving a corporation, the trial court appointed a receiver, who took possession of the corporation's property.   In a prior disposition, the California Supreme Court had held that the appointment of the receiver was not authorized under the statutes and that the order of appointment accordingly was null and void.  (Havemeyer v. Superior Court (1890) 84 Cal. 327, 380;  Sullivan, supra, 145 Cal. at p. 760.)   Thereafter, the receiver filed an account and report, seeking compensation for his attorneys' fees, and the state legislature passed an act appropriating the amount out of the state treasury.   The payment of those fees was the issue in Sullivan.

The Sullivan court concluded that, because the order appointing the receiver was void, the order allowing compensation must be void.  (Sullivan, supra, 145 Cal. at p. 769.)   The court distinguished Lawrence v. Booth (1873) 46 Cal. 187, in which the state was compelled to allow a claim for costs, stating that “the validity of the order itself is here called in question, whereas the validity of the order made in Lawrence v. Booth was never in controversy․  This, it will be observed, does not present the case of a reversal of an order appointing a receiver for mere error or irregularity in its procurement.   It presents the case of an order void for want of legal authority, where the receiver, in point of law, was not a receiver but a trespasser.”  (Sullivan, supra, 145 Cal. at pp. 767–768.)

Appellants also rely on Lewis v. Shaw (1926) 77 Cal.App. 99 (Lewis ), which addressed whether an order appointing a receiver was void.   In Lewis, the petitioners admitted that their complaint merely sought the impounding of certain funds and the appointment of a receiver, which the appellate court noted was not sufficient to state a cause of action.   The court reasoned that “[i]n matters of this kind a receiver can only be appointed in certain cases where fraud is specifically alleged.”  (Id. at p. 101.)   Because there was no basis for appointing a receiver, the trial judge did not have authority to determine any questions arising from the receiver's final report.  (Id. at pp. 101–102.)

Unlike Sullivan and Lewis, in which the appointment of the receiver itself was completely unauthorized and therefore void, the appointment of the receiver here was valid.   We reversed the order appointing the receiver only because the stipulation to be enforced by the receiver was reversed, not because of the lack of merit of the appointment.   We therefore disagree with appellants' contention that the trial court lacked authority to compensate the receiver's costs.

We note that the trial court was fundamentally following our instructions in the prior appeal when it terminated the receivership and received the final account and report.   We instructed the trial court as follows:  “Upon issuance of the remittitur in this appeal, the trial court shall supervise the termination of the receivership by issuing appropriate instructions to the receiver, including instructions for the presentation of the receiver's final account and report as required by California Rules of Court, rule 3.1184.”   Implicit in this language is that the receivership would terminate in the same manner as any other receivership would.

“ ‘When there has been a decision upon appeal, the trial court is reinvested with jurisdiction of the cause, but only such jurisdiction as is defined by the terms of the remittitur.’ ”  (Karlsen v. Superior Court (2006) 139 Cal.App.4th 1526, 1530 (Karlsen ).)  “ ‘ “The order of the appellate court as stated in the remittitur, ‘is decisive of the character of the judgment to which the appellant is entitled.   The lower court cannot reopen the case on the facts, allow the filing of amended or supplemental pleadings, nor retry the case, and if it should do so, the judgment rendered thereon would be void.’ ” '  [Citation.]”  (Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 23 (Wanland ).)

In Wanland, the appellate court had awarded the defendants costs and attorney fees in a prior appeal, with the amount to be determined by the trial court.   After the trial court entered an order awarding those expenses, the plaintiffs again appealed, arguing that the award exceeded the trial court's jurisdiction.   The court rejected the second appeal, reasoning that “[t]he trial court did no more than it was directed to do.”  (Id. at p. 23.)

Similar to Wanland, the trial court here did no more than we directed it to do in the prior appeal.   Because “ ‘[t]he trial court is empowered to act only in accordance with the direction of the reviewing court,’ ” any other action the court might have taken would have been void.  (Karlsen, supra, 139 Cal.App.4th at p. 1530, italics omitted.)   The trial court did not err in entering an order approving compensation to the receiver.

II. Section 908

Appellants contend that, as the prevailing party in the prior appeal, they are entitled to restitution under section 908.   The statute provides:  “When the judgment or order is reversed or modified, the reviewing court may direct that the parties be returned so far as possible to the positions they occupied before the enforcement of or execution on the judgment or order.   In doing so, the reviewing court may order restitution on reasonable terms and conditions of all property and rights lost by the erroneous judgment or order, so far as such restitution is consistent with rights of third parties and may direct the entry of a money judgment sufficient to compensate for property or rights not restored.   The reviewing court may take evidence and make findings concerning such matters or may, by order, refer such matters to the trial court for determination.”

Section 908 is not applicable here.   Appellants did not lose any property or rights as a result of the orders that were reversed in the prior appeal.   The order approving and settling the receiver's final compensation and reimbursement authorizes payment from the receivership estate.   Although the order further provided that the parties “jointly and severally shall defend and indemnify the Receiver against any claims, demands, debts, etc. which may arise from this receivership,” there is no indication that appellants have been forced to defend or indemnify the receiver.   We therefore reject appellants' argument that section 908 applies.

III. Section 170.6 Disqualification

Appellants' third claim is that the trial judge was required to disqualify himself because the prior orders were reversed in full.   Section 170.6 provides that a party “ ‘may make an oral or written motion to disqualify the assigned judge, supported by an affidavit that the judge is prejudiced against such party or attorney or the interest thereof so that the affiant cannot or believes he cannot have an impartial trial.’ ”  (Peracchi v. Superior Court (2003) 30 Cal.4th 1245, 1252.)   Appellants rely on the provision that a motion to disqualify “may be made following reversal on appeal of a trial court's decision, or following reversal on appeal of a trial court's final judgment, if the trial judge in the prior proceeding is assigned to conduct a new trial on the matter.” (§ 170.6, subd. (a)(2).)

The statute clearly states that the judge may be disqualified following reversal if he is assigned to conduct a new trial on the matter. (§ 170.6, subd. (a)(2).)   Here, the trial court was not assigned to conduct a new trial on the matter but was instructed to terminate the receivership and to issue instructions to the receiver to present the final account and report.

Although courts have interpreted the term “new trial” broadly, the inquiry generally has focused on whether the trial court on remand must make new findings or rule on the merits of the litigation.  (Paterno v. Superior Court (2004) 123 Cal.App.4th 548, 556–558 (Paterno );  Pfeiffer Venice Properties v. Superior Court (2003) 107 Cal.App.4th 761, 767.)  “If the court's function is merely a ministerial act (such as the recalculation of interest),” the disqualification provision does not apply.  (Paterno, supra, 123 Cal.App.4th at p. 558.)   Here, the court's function in terminating the receivership and approving the final report was “merely a ministerial act.”   As the trial judge reasoned in rejecting appellants' motion to disqualify, he was not required on remand to hear a new matter but was merely administering this court's instruction.   He therefore was not required to disqualify himself pursuant to section 170.6.

Contrary to appellant's contention that section 170.6 allows for disqualification of a judge after reversal as a matter of right, the statute states that a motion for disqualification “may be made following reversal on appeal of a trial court's decision, or following reversal on appeal of a trial court's final judgment, if the trial judge in the prior proceeding is assigned to conduct a new trial on the matter.” (§ 170.6, subd. (a)(2), italics added.)   The language accordingly is permissive, not mandatory.

The trial court was not “required to reexamine issues litigated in the prior proceeding.”  (Paterno, supra, 123 Cal.App.4th at p. 561.)   The judge accordingly did not err in denying appellants' motion to disqualify him.

DISPOSITION

The judgment is affirmed.   Respondents shall recover their costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. All undesignated statutory references are to the Code of Civil Procedure..  FN1. All undesignated statutory references are to the Code of Civil Procedure.

FN2. The underlying facts are not pertinent to this appeal and therefore are set forth only as needed to understand this opinion..  FN2. The underlying facts are not pertinent to this appeal and therefore are set forth only as needed to understand this opinion.

EPSTEIN, P. J. SUZUKAWA, J.