district court appointment of a receiver flip specifically the manner in which this was done denied santander bank any due process of law views the district court's discretion in the appointment and violated sand rights as a secured credit where did you argue to the trial judge that he was violating your due process rights well your honor number one a scheduling conference is not amenable to arguing due process when that order was entered appointing the receiver on july twenty third and we were given twenty or forty eight hours to object to the appointment of mr han not in general i follow the jacksons i objected specifically to the sewer spawn take a appointment of a receiver and my understanding of seuss ponty is what a court does something on its own initiative that's exactly what happened there was no request a receiver made by key bank in first source bank there was a request for receiver in february of two thousand and eighteen their first source bank intervened as did santander banks only to defend a full hearing was held in front of judge mchugh witnesses were present the issues were addressed and six specific reasons were advanced why the judgement you were denied that i seem to show up at a rule sixteen in front of judge diamond and he offers without prompting that he's thinking about appointing a receiver well the judge diamond came out in his opening remarks and said my strong inclination is to appoint a receiver and he's then launched out on how the situation had changed since judgement you had it before him but at what i read the entire transcript of that hearing i didn't see anything from sandton there any of the other banks that said your honor with all due respect we don't understand how you could think about appointing a receiver because we haven't had any due process we would like a hearing we would like an opportunity to brief the issue and be heard i didn't see anything remotely like that in the in the transcript frankly your honor what occurred in that scheduling hearing wasn't was a hearing by ambush santander walked in believing that right as we were showing was in one lawyers feels anguish the lawyer says with due respect honor i believe that this isn't the time or the place for this argument i would seek leave of court to brief the matter and ask for a hearing that was never done was it just a mistake of counsel or a mean well remember forty eight hours and we were not given leave by the specific provisions of that order to raise issues like due process or abuse of discretion we were given leave to oppose mr han substantive grounds namely did he have a conflict of interest so we were not permitted by the terms of the order to do it i filed an objection boat so a lawyer can't raise a due process objection unless a judge puts violating my client's due process rights is precisely what the judge is it appreciating that he or she is giving your client at a quick process first of all the supreme court has said it is not necessary to shout due process as an incantation to preserve that issue the third circuit has likewise agreed that to preserve an issue it's not necessary to use any particular buzzwords we raised with the district court the concept that the district court was appointing a receiver on its own initiative without having been asked in the first instance by any particular party we were given it was the first time it was denied without prejudice right well the first time it was denied subject to being raised if there was a change of circumstances who member there was never any evidence whatsoever before the district court when that receiver was appointed there was when you go to a rule sixteen scheduling conference after you've already won in a receiver has been denied and you expect to discuss things like you've been told to submit a rule twenty six f memorandum you've been told to do all these things and you walk separately filed confession of judgment with the key bank first source united case and the first and the fleet way suit against first source they were done no after this did you your first objection to the use of receiver we were given forty eight hours where did you file when they had we followed an objection yes and i objected to the sewer spontaneous appointment and i objected to the provisions of the order both key banc and first source agree with my interpretation they said that's a final order you can't object as you've done because you have to follow a motion for relief from a final order not just an objection your procedurally improper santander c and you did raise it and you lie well yes we lost a limb two days later and we've been raising due process as a specific buzz word to say ever since then because when you sit back and look and you find out two days later what happened we won the first case we won it going away all the grounds the judge mchugh denied the receivership were the grounds that we wanted to advance and the next thing you know we've got a receiver and what does the receiver do for us the receiver simply increases our loss there was no really good the receiver oil would what do you would relief do you want here and i'm concerned about there's probably a will even more blood on the floor now than there was back last july we want in terms of the lenders recouping what they put out there we want to receive terminated as to our collateral we would like to take back our to execute on your collater repossess to do whatever we would have done not in the first instance we have more competence in dealing with that collateral and dealing with the fleet way than the receiver did to receive how many lawyers are we talking about for your client probably five hundred or so there are leases they have and what are they coming off lease well they're coming off periodic leave sentosa the latest the last lease problem i don't honestly know that off the top of my head your honor our a loan had matured santander has an entire division that's devoted to auto leasing they could have taken over everything and done it themselves they didn't need to restore you know what was stopping you from reply being yes to the collateral that order prohibiting the order or a motion for receivers lay back in before february and from february to july you could have been replevin your property we were happy with what pleat way was doing if you were happy with carteaux hard on was doing a good job he was giving us reports he was remitting the payments we were getting more payments and reports from car down now we're getting from the receiver all that's happening with the receiver is we have someone is charging eight hundred twenty five dollars an hour and basically doing what a nistrative people in santander could do if santander needed a lawyer that's what i do we didn't need it we told the court and that's why you object to the receiver in the first place yes so why when when judge  objected to you won't now forget the order ok here you show up it will sixteen and as i read your briefs you were quite surprised shocked by that he says um i'm looking at put it putting a receiver there was nothing stopping you that day the next day the day after from going to replevin your collateral why did you when you had july twenty third order stayed us it stayed everything he had heard that order on july twenty third the rule sixteen to order was issued and then we filed motions to terminate the receivership to bar the receiver from selling our collateral and we filed a half a dozen motions and they were characterized as calling by judge diamond because really just wanted a car you just wanted to be able to pursue your collateral on your own terms and they could you know what with the other banks that interest them was their business exactly that's exactly what it was because the receiver did nothing for us instead  we have is a situation where we are under secured creditor first priority but under secured every dollar that you used to pay that receiver increases our loss that you had that you had to pay for your own employees to try to get these cars so right we have in care ways to do that day in day out we have santander has its own lawyers if we wanted to pick the cars up we go out and do our plug ins where they are it's incomplete is it that receiver webb as competent as your staff write he's not as competent and he said more expensive i mean we are going to suffer a larger loss because that receiver was appointed than if the receiver had not been appointed and that shouldn't happen to us we never asked for it there was no reason to do that and if they were going to do that to us why didn't the judge give us some advance notice so that we would be thinking about it as we came into the work favoritism problem here i mean you've got you've got two other big banks who you know double what your road and then some and they seem like this is the situation they want it so well which is this and is this a matter of the receiver showing favoritism toward your competitor banks no not not to competitors bankers or what are they so happy with the arrangement you're so upset with your age which is follow the motion all five banks asking the court for a status conference to discuss terminating this receivership they're seeing that it isn't so good for them either why are we here because that was deny and deny it out of hand and santander was told they were the bad guy because we've been obstructing the receiver in his efforts to do so let me get  a budget so that there was just not unlimited money going out the receivers build over six hundred thousand dollars already if any of it though toward your collateral well yeah oh it's of course they're selling our collateral they're collecting  that his now evaporated because there's not enough money and the judge on march twenty sixth authorized the receiver to now invade even the sale proceeds not just the lease collections from collateral so as far as we're concerned the receiver is now fully authorized to dip in to our collateral there's no saying well i've always got enough to say to pay you if you win an appeal and impractical then it's the other banks do they do they want to intervene here and make their position known well p even there they didn't get into chance to raise their hand and say we don't really want this he came in and said it was such a free for all between the banks there was no free for all everybody had their own identifiable collateral and could pick it up  pointed that out in our opposing memoranda that he's he's appointing receivers when there's people that are affected that didn't even have notice of what a bill is so so it sounds like the relief you're seeking from us is that we vacate the order point receiver for not having followed the applied the equitable factors that are preconditions the appointment receiver of the likelihood of success that sort of obvious and you get confessed judgments everywhere so really we're dealing with the balancing of the equities in greater harm versus i mean it's all the decision say this is a drastic remedy a last resort not really but i'm trying to get to which of the factors are really in play and it seems to me like these of the fleet way because that's the company over whom the receiver was appointed likely to have success the banks versus fleet way that's a no brainer because you're owed a ton of money and you get confess judgments everywhere and we got our confessions we'd our we didn't execute on them we only we got them to perfect our the amount they were road and so we could record the judgments against the guarantors in other states but we sat still and we were we were happy to work with fleet way but please wait no more it's been the receiver has been there there's no more possibility of a company it's just gone so there's so so there's nothing pending before judge time it does play well the receiver has another fee request that just came in yesterday and that they're going to be an objection there because i think to preserve our rights we must now object because our collateral is there's not enough money to pay them without going into our collateral ok thank you can thank you your  contact there are two pots of money here that are coming into the state lease payments and prepay proceeds of sales of vehicles we file that we were using these payments to pay costs of receivership the payments that come expenses to send tenders collateral well no your honor as mr gephardt indicated we have had an ongoing agreement and that we will take our fees out of the pot of money that's there there's a separate agreement first of all with all the lenders that says that that's without prejudice to anybody's rights second of all we agreed with santander because that because of his pending appeal we're going to make sure there's enough money in that pot to pay one hundred percent of what they're owed his briefly from payments and the sale proceeds we give seventy five percent of all of that to the lenders immediately fall back twenty five percent we've agreed with santander so far that from that twenty five percent we're going to make sure there's enough there that if they w when they're allowed to get every sentence that's come from their collateral we have enough money to pay that so he's not right to say that going forward we're just abandoning that agreement and going to start dipping into their collateral are so they can be made whole if we vacate the receivership that's correct that's correct at present and we've agreed that we want they can do that without it i mean it does seem like this was done you know i had trouble seeing where the due process argument was preserved i assume i think that's the basic findings that would typically be expected for this drastic brevity yes your honor i think if you look two places first of all remember on july twenty third there was a conference at the end of the day judge diamond entered an order proposing to appoint a real simple and in that order i think if you look at page two of the order he has a paragraph where he said in the appendix is your honor i have a copy of b order that's right o a receiver and then essentially the same paragraph appears appears i think i'm page two as well of the july thirty first order actually appointing a receiver and critically none of the parties including santander made any objection to that parallel that's what that's what troubles me because it you know initially when i read the file i thought well the trial judge said the receiver was appointed without objection so then really what was it issue was the suitability of this particular receiver not a receiver generically but when i looked at the file santander did object not on behalf  of first source and key bank but on behalf of itself and said that we do not we in respect of our collateral and what we are we do not agree that a receiver is appropriate we think mean i agree with that you're on about i think you have to look at what those objections said they filed in the eight days between the proposed order and the final order appointing the receiver they filed three different beatings totaling like forty pages and in those i think they say we don't approach object and they say and that we don't object to mr hand we be appointed they say we have a general objection to the appointment of a receiver and then they say they object to various provisions of the receivership or but if you look at the memo of law attached to that and then the response to key banks objection and their reply to our object our response to their objection the only issue they raised in there was as an as an argument that they presented a precedent about and argued about was this question of subordinating their lean to the payment of receivership costs they don't raise due process issue they mention briefly i think they say there is an open issue whether or district judge can appoint a receivers who aspire they don't identify any other process issues they didn't raise any question about the facts underlying judges to judge diamond's proposed appointment to receiver and they didn't raise also of i don't know that we've got this in our brief they didn't raise this issue about whether had against that's a very difficult question your honor which i fortunately can't answer at the moment what i can say is and i have a copy here beyond the monthly report we filed most recently of covering the period from july to the end of february  reflects that through the end of february there was deaver has collected ten million dollars in life but we spain and and see it through sales of vehicles and that's about sales i think of about a third of the portfolio  vehicle that's actually my next question i like to know how quickly this is i mean it's just all going to be done by the time we can put out an opinion that i don't think so your honor and again this is something we've discussed extensively with the with the banders if i recall out by the and disuse here and three quarters of it by the middle of two thousand and twenty if i recall correctly so it's going to be longer i think than it would take you to get your opinion but we're not talking about another five let's assume i think you're right i don't think it's an assumption i think it's just factual that some of the strong arguments being made in this appeal by sinton deer weren't necessarily put before judge diamond and maybe it was because of the with which he he moves but isn't it also factually true that he just did not make findings about balance of harm to the parties the public interest there were sort of vague allusions to bad dealing i wouldn't use the word fraud necessarily but there was talk of hundreds of cars disappearing in things like that i remember mr reid for fleet way was somewhat i would say of a civil or at least cautious in responding to some of those challenges from the judge and i assume that was troubling to the judge right but the findings that we would expect to see for the entry of an equitable remedy like a receivership like an injunction like a stay we don't have any of that here well i think your honor and again it's not a lot but i can only refer you to think you have to look at three things that judge diamond was considering in the contacts of five months having abit when you just glossed over where those actual findings by the quarter were those arguments of count recorded any point consider less severe remedies other remedies to take care of this i mean even just appointing a special receiver over day could first source's collateral your honor i do i can't say what judge diamond considered here's why bankruptcy is not in the offing fleet way has no incentive to file bankruptcy here's why an involuntary bankruptcy filed by one of the lenders would be unhelpful where you are here's why here's why a lot going to parties a month or two to reply via their own collateral right here's why that's outweighed by appointing this receiver right your honor i think i agree that the record doesn't reflect any of that consideration but i think you have to look at the case science cited santander cites a bunch of cases where courts have sad appointing receivers a drastic remediate should only be considered after all last or remedies have been the key consideration is that look peter is much more like this case than any of the cases in tampa cites the peter is also a case where amanda is coming into court asking for their appointment of a receiver to protect its clout collateral the cases santander cites and don't involve members involved in minority shareholders or the federal government seeking a receiver as part of criminal court which are in the next year a case that they cite involved a district judge considering a receiver for litigation misconduct and in fact the court in that sphere goes through extensive blanks to distinguish that situation from a case like this where you have a lender asking a court to appoint a receiver to protect and those cases are also different because in those cases the company seeking the receive that was the subject of the receiver or its principles came into court in objective and five didn't feel they have a much more direct interest law than that i think you've just you've just identified what makes this case so interesting influenced a district judge but and had all the creditors been on the same page then maybe no findings were needed because you've got in centrally a consent receivership  dollars that's objecting right so it really isn't a receivership i can say it's right but i think there are you also have to consider what the practical remedy could be here because you have customers of fleet way that have lease significantly increase the cost for everybody and i think it would significantly decrease the amount recovered on behalf of all the lenders because you'd have santander going after a customer saying you a lost money and fleet way in the receiver on behalf of wheat  of money and it's different money for different cars but the customers are going to take advantage of that and say i don't know what i should pay i'm just going to sit here and not pay anybody and the cars are depreciating and there's not and we're going to be able to do about that but if that were the case then why point in response to our request to be allowed to use the proceeds of the sale they asked that the court schedule a status conference to consider imposing a budget including an absolute cap on monthly an average fees and second and date for the receiver down the road judge diamond that wasn't a response to our motion judge dining granted our motion and they haven't filed a motion or another request to ask the court to do time of the hearing before judge mchugh first stores went out to the customer and demanded that they paid him directly so first source has been on its own collecting collateral i would say that that hasn't been an easy situation for us to deal with we've had some fights that ended up before that we violation of the receipt no no because they were already doing that before we appointed they objected on that ground to the receivership order and we agreed to a modification that allowed that to continue but we'd have a fight for example about just briefly your honor at the july twenty third scheduling conference in the july twenty third receivership order and in the july thirty one confirmation judge diamond made various remarks about fleet way and its situation he had absolutely no evidence on which to do that he just simply said this is how it is the situation is worse i see confusion i see this how he even knew some of these facts they certainly didn't come to him through judicial means whatever he did he had absolutely no evidence not even an affidavit before him mr reed didn't push back well mr reed frankly and we're dealing with history now in the confessions of judgment here and i mean whether he pushed back or not or how it all i mean i read the transcript he rolled over well i've unfortunately would probably agree with you he should have push and i'm not calling them findings because if you say their findings there can be absolutely clearly iranian the precedent is if a court makes a finding of fact with no evidence to support it it's clearly ran judge had no evidence whatsoever to support any of the remarks he made in the hearings were in his two waters he just gives what happens if you weigh in here where it would go well where do we go we go take back the balance the proceeds of it now i must to warm your heart while i was in so it would be consistent with what you thought the case was when you first that was part of our agreement the not continued fee objections but let me tell you where they get paid per source and key bank because they initially asked for a receiver and reaffirmed to judge diamond that they would like a receiver there collateral can be charged because they've consented to the payment from their collateral we have not under secured we're go suffer a loss if any of our collateral is used here thanks out for a loss either way down yes or but the loss will be greater think of why key bank and first source are here now sitting at the counsel table the receival is because this receivership benefits only the receiver it doesn't even benefit key bank and first source who probably could have dealt with their collateral better themselves t d bank and first source aren't even participat