Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_19-cv-01628/USCOURTS-casd-3_19-cv-01628-9/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:0078m(a) Securities Exchange Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

GINA CHAMPION-CAIN AND ANI 

DEVELOPMENT, LLC,

Defendants, and

AMERICAN NATIONAL 

INVESTMENTS, INC.,

Relief Defendant.

Case No.: 3:19-cv-1628-LAB-AHG

ORDER GRANTING RECEIVER’S 

MOTION FOR APPROVAL OF 

SALE OF CARMEL PROPERTY

[ECF No. 246]

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I. BACKGROUND

On 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. 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. See also 28 U.S.C. § 636(c); 

CivLR 72.1(g). Accordingly, all property sale motions are set before the undersigned 

pursuant to that grant of consent.

According to the Receiver’s Verified Initial Report, the receivership encompasses 

approximately 70 entities, including over 60 real properties and operating businesses at the 

time of the Receiver’s appointment. ECF No. 76-1 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 rental home 

located at the SE Corner of Casanova Street and Palou Ave in Carmel by the Sea, 93921 

(the “Carmel Property”). ECF No. 76-2 at 6. On February 13, 2020, the Receiver filed the 

present Motion for Approval of Sale of Carmel Property. ECF No. 246 (“the Carmel 

Property Motion”). On February 14, 2020, the Court entered an order setting a briefing 

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schedule and hearing on March 16, 2020. ECF No. 248. The Court set a deadline of 

March 2, 2020 to file any response in opposition to the Carmel Property Motion, and noted 

that “if no opposition is filed by the deadline, the Court may take the motion under 

submission without oral argument.” Id. at 2. No opposition was filed. Therefore, being 

fully advised and noting the lack of opposition, the Court will GRANT the Carmel 

Property Motion without oral argument,

1 for the reasons explained more fully below.

II. LEGAL STANDARD

“[I]t 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). 

As part 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.” 

 

1 For the same reasons, the Court took both the present motion and another pending 

property sale motion under submission on the papers on March 12, 2020 and accordingly 

vacated the March 16th hearing. ECF No. 273.

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Id. (citing 2 Clark, Treatise on Law & Practice of Receivers, §§ 342, 344, 482(a), 487, 489, 

491).

Pursuant 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.2 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”).

III. DISCUSSION

A. Background of the Property and Proposed Sale

The Carmel Property is held by the Cain Family Trust and was originally purchased 

on September 30, 2016 for $1,395,000. ECF No. 246-1 at 5. Months before the Receiver’s 

appointment in September 2019, Defendant Gina Champion-Cain and her husband Steven 

Cain, as Trustees of the Cain Family Trust, engaged licensed broker Carmel Realty 

Company (“Broker”) to list the Carmel Property for sale. The Carmel Property was put on 

the market in May 2019 at a list price of $1,950,000. Id.

Following her appointment, the Receiver and her staff reviewed automated valuation 

scores for the Carmel Property and a survey of market-comparable properties. Id. The 

 

2 28 U.S.C. § 2001 also provides for a private sale process under subsection (b), but the 

requirements of that subsection are more stringent. The Receiver does not propose a private 

sale here.

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Receiver also reviewed the listing agreement with Broker and conferred with Broker over 

time regarding the list price. Id. at 5-6. According to Broker, the Carmel Property was 

advertised through multiple real estate websites and database and through print media, and 

Broker held a total of 21 open houses and 21 private showings in addition to broker tours,

without receiving any offers. Id. at 6. Following detailed discussions with Broker regarding 

the passage of time with no offers, and considering closed sales comparisons in the market, 

the Receiver concluded the list price was too high and instructed the Broker to lower the 

price intermittently to generate more interest from prospective buyers. Id.

In early December 2019, Michael Ward McColl and Gwyn Fawcett McColl 

(“Buyer”) made an offer of $1,450,000 on the Carmel Property. Id. After negotiations, the 

Receiver and Buyer ultimately agreed on a sale price of $1,550,000 on December 16, 2019. 

Id.; see also ECF No. 246-3 at 14, Ex. A to Freitag Decl. (Receiver’s acceptance of Buyer 

Counter Offer No. 1). The Receiver and Buyer executed a California Residential Purchase 

Agreement and Joint Escrow Instructions (“Purchase Agreement”), along with an 

Addendum making court approval of the sale a condition to closing and providing for the 

overbid and auction process required by 28 U.S.C. § 2001(a). ECF No. 246-3 at 15-22.

Buyer has deposited $43,500 into escrow. ECF No. 246-1 at 7.

B. Proposed Procedures and Distribution

In the motion seeking approval of the sale, the Receiver proposed compliance with 

the overbid and auction process by publishing the following notice in the Monterey Herald

once a week for four weeks:

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 SE CNR Casanova & Palou, Carmel by the Sea, California 93921 

in Monterey County, California. Sale is subject to Court confirmation after 

the auction is held. Minimum bid price is at least $1,600,000. The auction will 

take place on March 12, 2020 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 

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qualification requirements, including submitted a signed purchase and sale 

agreement, an earnest money deposit of $47,850, and proof of funds. All 

bidders must be qualified by 5:00 p.m. PT on March 10, 2020, by submitting 

the required materials to the receiver at 501 West Broadway, Suite 290, San 

Diego, California, 92101. 

ECF No. 246-1 at 11. For those interested in qualifying as bidders, the notice also provided 

a phone number and email address for the relevant point of contact. Id.

The above notice was published as proposed. On March 11, 2020 the Receiver filed 

a Notice of Non-Receipt of Qualified Overbids Regarding the Carmel Property Motion. 

ECF No. 270. In the Notice, the Receiver informs the Court that, after filing the Carmel 

Property Motion and in addition to publishing the notice in the Monterey Herald, she posted 

notice of the Motion on the receivership website anireceivership.com, and continued to 

market the property and notify potential purchasers about the opportunity to submit an 

overbid by March 10, 2020. See id. No overbids were submitted by the deadline. Therefore,

Michael Ward McColl and Gwyn Fawcett McColl are still the intended Buyer.

Turning to the Receiver’s proposed distribution of the anticipated sale proceeds, the 

Carmel Property is encumbered by a deed of trust in favor of Select Portfolio Servicing, 

Inc. (“SPS”). ECF No. 246-1 at 6. The outstanding principal balance of the loan was 

approximately $908,000 as of February 1, 2020, and the Receiver continues to pay the loan 

current. Id. The Receiver intends to use the proceeds of the sale of the Carmel Property to 

pay off the SPS loan and estimates the amount required to do so will be between $905,000 

and $915,000, assuming a late March or early April 2020 closing. Id. The Receiver also 

estimates that the property taxes to be paid at closing will be between $4,000 and $6,000, 

and that costs of sale including escrow, title and recording fees will be approximately 

$8,000. Additionally, the Receiver estimates that the cost to perform statutorily mandated 

repairs of the sewer line and installation of carbon monoxide detectors, along with other 

maintenance items, will total approximately $9,000, to be paid from escrow. The Broker’s 

fee pursuant to the listing agreement is 5% of the sale price, or $77,500, to be split with 

Buyer’s broker. Id. at 6-7. Based on these estimates, the Receiver anticipates that the net 

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sale proceeds remaining to be distributed to the receivership estate will be in the range of 

$535,000 to $545,000. Id. at 7.

Notably, the Court’s Order Establishing Uniform Property Sale Procedures 

ordinarily requires the Receiver to “consider[] at least two brokers before choosing the 

listing broker with respect to each proposed property sale, except if the Receiver has 

previously worked with the same broker to sell receivership property or otherwise obtains 

an excusal of this requirement by the Court.” ECF No. 219 at 4-5. Here, the Receiver seeks 

relief from this requirement because the Carmel Property was already subject to a listing 

agreement with Broker Carmel Realty Company prior to the Receiver’s appointment, and 

the Receiver therefore “did not (and could not) consider other licensed brokers for the 

listing.” ECF No. 246-1 at 5 n.2.

C. Court Approval of the Proposed Procedures and Sale

The Court has reviewed the documents submitted by the Receiver in support of the 

Carmel Property Motion and finds the purchase price of $1,550,000 to be fair and 

reasonable. This price exceeds the 2016 purchase price of the property by $155,000. ECF 

No. 246-2, Freitag Decl. ¶ 2-3. Although this difference does not reflect an especially 

lucrative return, the property was on the market for approximately seven months before 

any offer was received despite significant efforts by Broker to market and advertise the 

property. Before Buyer and Receiver entered into the Purchase Agreement, Broker listed 

the property on the MLS, Realtor.com, and a custom website, held 21 open houses and 21 

private showings, and showed the property on multiple broker tours. Id. ¶ 4 n.3. The 

Receiver only instructed the Broker to reduce the listing price after significant time passed 

with no offers despite diligent marketing of the property. The parties also negotiated the 

terms of sale, going back and forth twice with counter-offers before coming to a final 

agreement on terms and price of the sale. See ECF No. 246-3 at 13, 14.

Moreover, the Receiver’s publication of notice seeking qualified overbids in the 

Monterey Herald, in addition to the solicitation of overbids through the receivership 

website and continued efforts to market the property, establish that the Receiver not only 

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met but exceeded the requirements for the public sale procedures set forth in 

28 U.S.C. §§ 2001(a) and 2002 designed to ensure the best price is obtained. Therefore, 

upon review of the factual history and the Purchase Agreement itself, the Court finds the 

Purchase Agreement was negotiated at arm’s-length and, further, that the Receiver 

implemented sufficient safeguards by way of the notice and overbid process to garner the 

highest possible price for the property. The Court is thus satisfied that the intent of the 

statutory scheme—to ensure that the best and highest possible price is paid for property 

within the receivership estate—has been fulfilled. 

The Court will also grant the Receiver’s request to excuse the requirement of 

considering at least two brokers for property sales. Taking into account the other 

information in the Carmel Property Motion, there is nothing to indicate that moving 

forward with the broker who already held the listing agreement has had any negative 

impact on the sale of the property. For example, the proposed purchase price of $1,550,000 

is close to the Estimated Market Value of $1,600,000 of the Carmel Property in the October 

2019 Preliminary Real Estate and Liquor License Asset Schedule, and, as already noted, it 

exceeds the 2016 purchase price by $155,000. Additionally, the Broker’s commission of 

5% of the gross sales price, to be split with the Buyer’s broker, is consistent with industry 

standards. Most importantly, the Receiver represents that she did not have the option of 

considering other brokers due to the existing listing agreement. Therefore, the Court finds 

good cause to WAIVE that portion of its sale procedures requiring consideration of more 

than one broker, and approves the Receiver’s use of Carmel Realty Company as the Broker 

in accordance with the listing agreement. See 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 

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conducting the sales in a timely and cost-efficient manner that will maximize the net sales 

proceeds.”).

All other uniform property sale procedures have been satisfied. Based on these 

considerations, and noting in particular the lack of any express opposition to the Motion, 

the Court finds the Receiver has sufficiently established that the proposed sale of the 

Carmel Property and proposed distribution of the sale proceeds are consistent with 

principles of equity and the goal of a receivership to ensure the orderly and efficient 

administration of the estate for the benefit of creditors. See Hardy, 803 F.2d at 1038.

IV. CONCLUSION

Having considered the Receiver’s Motion for Approval of Sale of Carmel Property 

(ECF No. 246) on its merits and noting that there is no opposition thereto, the Court

GRANTS the Motion, and APPROVES the proposed sale of the single-family residence 

located at SE CNR Casanova & Palou, Carmel by the Sea, California 93921 to Buyer 

Michael Ward McColl and Gwyn Fawcett McColl at the purchase price of $1,550,000.

The Court further ORDERS the proceeds of the sale to be distributed from escrow 

at the close of sale as follows:

(1)Payment of the Broker’s Commission in the amount of $77,500 shall be paid to 

Carmel Realty Company in accordance with the listing agreement;

(2)Payment of any outstanding real property taxes; 

(3)Payment of reasonable and customary costs of sale, such as escrow fees, title 

insurance, and recording fees;

(4)Payment of the amount required to pay off the loan from Select Portfolio 

Servicing, Inc., estimated to be in the range of $905,000 to $915,000;

(5)Payment of the amount necessary to repair the sewer line, install carbon 

monoxide detectors, and to complete other repairs for which the Seller is 

responsible pursuant to the Purchase Agreement, including the “minor 

maintenance items” noted in the Motion, estimated to total approximately 

$9,000; and

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(6)Remainder of the net sale proceeds to go to the receivership estate. 

The distribution ordered above should not be read to place strict limits on the 

approved use of the sale proceeds. Rather, because the Carmel Property Motion is approved 

in its entirety, the Receiver is also granted the authority to take all steps necessary to close 

the sale and make third-party payments so long as such steps are clearly anticipated by the 

motion, e.g., splitting the Broker’s Commission with Buyer’s broker. Additionally, many 

of the distributed amounts approved herein are mere estimates at this stage. After closing, 

the Receiver shall provide a full accounting of sale, maintenance, and repair costs, the 

precise amount used to pay off the SPS loan, and the amount ultimately returned to the 

receivership estate from the sale proceeds.

IT IS SO ORDERED.

Dated: March 12, 2020

Honorable Allison H. Goddard 

United Staites Magistrate Judge 

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