Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-01678/USCOURTS-casd-3_15-cv-01678-7/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

Textron Financial Corp.,

Plaintiff,

v.

Michael S. Gallegos, 

Defendant.

Case No.: 15-cv-1678-LAB-AGS

REPORT AND RECOMMENDATION 

ON PLAINTIFF’S APPLICATION

FOR A SHOW-CAUSE ORDER

Defendant Michael Gallegos owes plaintiff nearly $22 million. While Gallegos 

claims poverty, plaintiff says that Gallegos is using his businesses to fund a posh lifestyle, 

including a $7 million mansion, luxury cars, and college expenses for two daughters. To 

help collect the debt, the Court assigned Gallegos’s interests in various businesses to 

plaintiff and warned Gallegos not to “evade payment.” (ECF No. 191, at 2.) Thereafter, 

Gallegos shuttled money from one of these businesses to another company he co-owns. 

That company—which was not listed in the assignment order—paid the lease on his

personal Mercedes Benz.

This shell game is proper, contends Gallegos, because no business covered by the

assignment order directly paid him. And plaintiff is only entitled to such direct payments, 

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or so the argument goes.

1 Plaintiff finds this argument unconvincing and moves for a showcause hearing to determine if Gallegos is in contempt.

Gallegos’s actions are gravely troubling. His businesses appear to pay his expenses,

yet he draws no salary, which would be subject to garnishment by creditors (and taxation). 

He should pay his debts or pay for his debt-dodging. But the current assignment order—

agreed to jointly by the parties—may lay an imperfect foundation for criminal contempt 

on these facts. To eliminate any wiggle room, this Court recommends modifying that order 

as follows:

AMENDED ASSIGNMENT ORDER

1. For purposes of this amended assignment order, the following definitions 

apply:

a. Payment: A “payment” refers to the transfer of any thing of value

(including but not limited to money, securities, valuables, and credit), except for a bona 

fide salary for defendant Michael Gallegos. The term “payment” includes both direct and 

indirect transfers.

b. Personal expenses: The term “personal expenses” includes expenses 

for Gallegos himself as well as for his immediate family.

2. Plaintiff SPE LO Holdings, LLC, is assigned Gallegos’s interests in any 

payment from any entity listed in the attached Appendix. SPE LO is entitled to any payment 

these entities make—or would otherwise make—that is: (a) directly to Gallegos; or (b) for 

Gallegos’s personal expenses; or (c) to any intermediary so that another may ultimately 

make a payment directly to Gallegos or for Gallegos’s personal expenses.

3. Gallegos must immediately report to SPE LO the amount and source of any 

salary he is currently receiving. This is a continuing duty, so Gallegos must also 

 

1 Gallegos admits that one business improperly paid him $250 after his interest in 

that payment was assigned to plaintiff, but claims it was due to a clerical error.

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immediately report any changes to his salary, such as a new salary source or any changed 

salary amount.

4. Gallegos shall not cause or encourage any entity listed in the attached 

Appendix to make a payment: (a) to him directly; or (b) for his personal expenses; or (c) to 

any intermediary so that another may ultimately make a payment directly to Gallegos or 

for Gallegos’s personal expenses.

5. If any entity listed in the attached Appendix fails to provide SPE LO a 

payment to which it is entitled as described above, Gallegos must immediately cause the 

assignment and transfer of that payment to SPE LO.

6. Gallegos must immediately provide each entity listed in the attached 

Appendix with a copy of this amended assignment order and inform each such entity of its 

obligation to immediately re-direct the payments described above to SPE LO.

7. Gallegos is warned that if he violates this or any other Court order, the case 

may be referred to the U.S. Attorney’s Office for a criminal contempt prosecution.

* * * * *

In light of the foregoing, this Court recommends that SPE LO’s request for a showcause order be DENIED.

Within five calendar days of the District Judge’s adoption of the foregoing proposed 

amended assignment order or issuance of a different amended assignment order, Gallegos 

must file with this Court a notarized verification that he has read that amended assignment

order in its entirety (including any Appendix), that he fully understands it, and that he 

agrees to obey it. That verification must be signed by Gallegos personally, under penalty 

of perjury, in the presence of a notary licensed in the state of California.

Any objection to this report is due by July 17, 2017. 

Dated: June 30, 2017

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APPENDIX

1. ABQ Hotel & Waterpark Investment, LLC

2. ABQ Hotel Investment, LLC

3. ABQ Hotel Ventures, LLC

4. Advent Hotel Management Corporation

5. Alameda Hotel Investment LLC

6. Amberly Hotel Investment, LLC

7. American Property Hospitality Management, LLC

8. American Property Hospitality

9. American Property Hotel II, LLC 

10. American Property Hotel LLC

11. American Property Investments, LLC

12. American Property Investors – Alexis Park, LLC

13. American Property Investors – Reid Park, LLC

14. American Property Investors-ABQ, LLC

15. American Property Investors-Knoxville, LLC

16. American Property Investors, LLC

17. American Property Management Corp.

18. American Property--Management Corporation

19. AP/APMC Management, Limited Partnership

20. AP/APMC Management II, Limited Partnership

21. APHM Cancun Hotel Management, LLC

22. APHM Carlise, LLC

23. APHM FL Hotel Management, LLC

24. APHM Hotel Management, LLC

25. APHM NM Concessions, LLC

26. APHM Sunport, LLC

27. APMC Carlise Hotel Investors, LLC

28. APMC Concessions, Inc.

29. APMC Hotel Management, LLC

30. APMC International Hotel Management, LLC

31. APMC San Diego Hotel Management, LLC

32. Arroyo Grande Inn-Vestment, LLC

33. Arroyo Hotel, LLC

34. Armada Hotel Investment, LLC

35. Avenger Hotel Management, LLC

36. Bay Area Hotel Investment LLC 

37. Canton Hotel Investment, LLC

38. Charleston Hotel Management Corporation

39. Charleston Hotel Management, LLC

40. Charleston Investment, LLC

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41. CRS Hotel Investment I, LLC

42. Coronado Hotel Management Corporation

43. Coronado Investment, LLC

44. Cumberland Hotel Management, LLC

45. Diamond Hotel Management, LLC

46. Downtown Hotel Investors, LLC

47. Downtown San Diego Hotel Investment, LLC

48. DSS Hotel Investment, LLC

49. Fine Hotels Limited Partnership

50. Front Street Hotel Investment, LLC

51. Galisteo Hotel Investment, LLC

52. Garden Hotel Investment, LLC

53. Gaudalupe Hotel Investment, LLC

54. Global Bancorp Commodities and Investments, Inc.

55. Grover Beach Inn-vestment, LLC

56. Grover Hotel, LLC

57. Harbor View Hotel Manager, LLC

58. Harbor View Hotel Ventures, LLC

59. Harbor View Investments

60. High Desert Hotel Investment, LLC

61. Jet Stream Hotel Management, LLC

62. Lamy Hotel Investment, LLC

63. Las Cruces Hotel Limited Partnership 

64. Las Cruces Hotel Management Corp

65. Little Italy Hotel Investment LLC

66. LLJ Canton Vinters, LLC

67. LLJ Hotel Ventures 4, LLC

68. Market Avenue Hotel, LLC

69. Market Avenue LLC

70. Melbourne Beach Hotel LTD. Co. LLC

71. Melbourne Beach Hotel Management Corp.

72. Melbourne Beach Investment Ltd. Co.

73. Mid-Continent Hotel Management, LLC

74. Mountain Road Hotel Investment, LLC

75. Northside Hotel Investment, LLC

76. Old Town Hotel Investment, LLC

77. Pacific Pearl Hotel Management - ABQ, LLC

78. Pacific Pearl Hotel Management - Boerne, LLC

79. Pacific Pearl Hotel Management - Fort Myers, LLC

80. Pacific Pearl Hotel Management -La Jolla, LLC

81. Pacific Pearl Hotel Management - Las Vegas, LLC

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82. Pacific Pearl Hotel Management - Niagara, LLC

83. Pacific Pearl Hotel Management - San Diego, LLC

84. Pacific Pearl Hotel Management - SLC, LLC

85. Pacific Pearl Hotel Management - Wisconsin, LLC

86. Pacific Pearl Hotel Management, LLC

87. Pacific Pearl Hotel Mgmt - Canton, LLC

88. Pacific Pearl Hotel Mgmt - Niagara, LLC

89. Pacific Pearl Hotel Mgmt - NW, LLC

90. Pacific Pearl Hotel Mgmt - Ontario, LLC 

91. Pacific Pearl Hotel Mgmt - Phoenix, LLC

92. Pacific Pearl Hotel Mgmt - Scottsdale, LLC

93. Pacific Pearl Hotel Mgmt - Tulsa, LLC

94. Pacific Pearl Hotels, LLC

95. Pan American Hotel Investment, LLC

96. Passaic Investment LLC

97. Picacho Hotel Investment LLC

98. Reid Park Investors, LLC

99. Rio Grande Hotel Investment, LLC

100. Rio Rico Resort Investment, LLC

101. Rock Around the World Management, LLC

102. Rosecrans Hotel Investment, LLC

103. San Antonio Hotel Investment-GP, LLC

104. San Antonio Hotel Investment-LP, LLC

105. San Diego Harbor View Investment, LLC

106. San Diego Hotel Investment LLC

107. Sangre De Cristo Hotel Investment LLC

108. Santa Fe Hotel Investment LLC

109. Santa Fe Picacho Hotel Management Corp.

110. Sassafras Hotel Investment, LLC

111. Sawmill Hotel Investment, LLC

112. St. Francis Hotel Investment, LLC

113. Stadium Hotel Investment, LLC

114. Tampa Hotel Investors LLC

115. Tucson Hotel Investors, LLC

116. UBB Investment LLC

117. Union City Hotel Management Corporation 

118. Union City Hotel, LLC

119. Union City Investment, LLC

120. Wisconsin Dells Hotel Investment, LLC

121. Wisconsin Dells Investment, LLC

122. Yakima Hotel Investment LLC

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