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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

WBCMT 2003-C9 ISLAND 

LIVING, LLC, 

 Plaintiff, Case No. 14-cv-14243 

 Hon. Matthew F. Leitman 

v. 

SWAN CREEK LIMITED 

PARTNERSHIP, 

 Defendant. 

_________________________________/ 

ORDER GRANTING PLAINTIFF’S REQUEST FOR APPOINTMENT OF 

RECEIVER AND DIRECTING PLAINTIFF TO SUBMIT PROPOSED 

RECEIVER CANDIDATE(S) 

On November 4, 2014, Plaintiff WBCMT 2003-C9 Island Living (“Island 

Living”) filed an ex parte motion for a preliminary injunction and the appointment 

of a receiver to manage and control a mobile home community currently operated 

by Defendant Swan Creek Limited Partnership (“Swan Creek”) at 23379 Island 

Drive, New Boston, Michigan (the “Property”). (See the “Motion,” ECF #2.) The 

Court declined to grant ex parte relief and ordered responsive briefing and oral 

argument. (See ECF #5.) Having now received briefing and heard argument from 

both parties, the Court GRANTS Island Living’s request for the appointment of a 

receiver. 

 

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FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On or about November 6, 2003, Swan Creek obtained a $4.35 million loan 

(the “Loan”) from LaSalle Bank, N.A. (“LaSalle”) to purchase the Property. (See

ECF #1-4.) Swan Creek executed three documents in connection with the Loan: a 

promissory note establishing a repayment schedule (the “Note,” id.); a mortgage as 

security for the Loan (the “Mortgage,” ECF #1-5); and an “Assignment of Leases 

and Rents” (the “Assignment of Rents,” ECF #1-6) (collectively, the “Loan 

Documents”). Island Living later acquired LaSalle’s interests in the Loan 

Documents through a series of assignments. (See the First Amended Complaint, 

hereinafter the “Complaint,” ECF #11, at ¶¶18-20; see also ECF #1-8.) 

 Both the Mortgage and Assignment of Rents provide that Island Living is 

entitled to the appointment of a receiver if Swan Creek defaults on its payment 

obligations under the Note. Specifically, the Mortgage provides as follows: 

If an Event of Default is continuing or if Lender shall 

have accelerated the Indebtedness, Lender, upon 

application to a court of competent jurisdiction, shall be 

entitled as a matter of strict right, without notice, and 

without regard to the occupancy or value of any security 

for the Indebtedness, without any showing of fraud or 

mismanagement on the part of Borrower or the 

insolvency of any party bound for its payment, to the 

appointment of a receiver or the immediate appointment 

of Lender to take possession of and to operate the 

Property, and to collect and apply the rents, issues, 

profits, and revenues thereof. 

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(Mortgage at § 24, Pg. ID 74.) In addition, the Assignment of Rents provides as 

follows: 

Upon or at any time after the occurrence of ... an Event 

of Default ... Lender shall immediately be entitled to 

possession of all Rents and sums due under any lease 

Guaranties, whether or not Lender enters upon or takes 

control of the Property. In addition, Lender may, at its 

option ... without notice and without regard to the 

adequacy of the security for the Debt, either in person or 

by agent, nominee or attorney, with or without bringing 

any action or proceeding, or by a receiver appointed by a 

court (which such appointment of receiver shall, upon 

application to a court of competent jurisdiction, be a 

matter of strict right, without notice) dispossess Borrower 

and its agents and servants from the Property ... and take 

possession of the Property and all books, records and 

accounts relating thereto and have, hold, manage, lease 

and operate the Property on such terms and for such 

period of time as Lender may deem proper.... 

(Assignment of Rents at § 3.1, Pg. ID 97.) In addition, the Mortgage provides that 

upon a default by Swan Creek, Island Living may, among other things, exclude 

Swan Creek from the Property and access Swan Creek’s books and records 

regarding the Property. (See Mortg. at § 21.) 

 Island Living now alleges that Swan Creek has defaulted on its payment 

obligations under the Note (see the Compl. at ¶¶22-26). At oral argument, Swan 

Creek conceded that it is in default under the Note. Island Living has commenced 

foreclosure-by-advertisement proceedings on the Property. (See ECF #12.) 

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In its Motion, Island Living seeks to enforce the covenants in the Loan 

Documents entitling it to the appointment of a receiver. Specifically, Island Living 

seeks “an order requiring that a receiver be appointed to manage and control” the 

Property and a preliminary injunction to “protect [Island Living’s] interest in the 

[P]roperty and income therefrom.” (Mot. at 1, Pg. ID 156.) Island Living is 

concerned that, without these remedies, Swan Creek will fail to maintain the 

Property and collect rents while foreclosure proceedings are pending. (See id. at 

12-13, Pg. ID 174-75.) Swan Creek opposes the requested relief. (See Resp. Br.) 

ANALYSIS

“There is a split of authority over whether the parties’ advance consent to the 

appointment of a receiver in the mortgage documents is dispositive to the issue of 

appointment, or whether it is simply one factor among the others that a court must 

consider.” Fed. Nat’l Mortgage Ass’n v. Mapletree Investors Ltd. P’ship, No. 10-

10381, 2010 WL 1753112, at *3 (E.D. Mich. Apr. 30, 2010) (collecting cases). 

Under either approach, however, Island Living has established its right to relief. 

Assuming, without deciding, that Swan Creek’s advance consent to the 

appointment of a receiver in the Loan Documents is dispositive, Island Living is 

plainly entitled to such relief. Indeed, Swan Creek expressly agreed in the 

Mortgage and Assignment of Rents that Island Living would be entitled as “a 

matter of strict right” to the appointment of a receiver to operate the Property if 

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Swan Creek defaulted on its payment obligations. (Mortg. at § 24; Assignment of 

Rents at § 3.1.) Here, it is undisputed that Swan Creek has failed to satisfy its 

payment obligations and, therefore, is in default under the terms of the Loan 

Documents. Accordingly, under this approach, Island Living is now entitled to the 

appointment of a receiver based on the unambiguous language of the Mortgage and 

Assignment of Rents. See, e.g., Fed. Nat’l Mortgage Ass’n v. Maple Creek 

Gardens, LLC, No. 09-14703, 2010 WL 374033, at *3 (E.D. Mich. Jan. 25, 2010) 

(“[Borrower’s] agreement in the Mortgage to the appointment of a receiver upon 

its default alone is sufficient to conclude that [Lender] is entitled to such an 

appointment at this time.”); see also Fed. Nat’l Mortgage Ass’n v. Newberry 

Apartments of Eaton County, Ltd., No. 11-00968, slip op. at 2-4 (W.D. Mich. Oct. 

20, 2011) (ordering appointment of receiver where borrower consented to 

appointment in loan documents).1

                                                            

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 A judge in this District has suggested that a court should not grant a lender’s 

request for the appointment of a receiver “in the absence of a breach of contract 

claim or a judicial foreclosure.” Fed. Nat’l Mortgage Ass’n v. Wellington 

Investments, LLC, No. 11-11414, 2011 WL 2787270, at *3 (E.D. Mich. July 15, 

2011). In this case, Island Living seeks to enforce its contractual right to the 

appointment of a receiver in light of Swan Creek’s two separate breaches of the 

Loan Documents: (1) Swan Creek’s failure to satisfy is payment obligations, and 

(2) Swan Creek’s refusal to consent to the appointment of a receiver despite its 

prior consent to such relief in the Mortgage and Assignment of Rents. Given these 

breaches, Island Living is now entitled to the appointment of a receiver. 

 

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As noted above, some courts have indicated that a borrower’s consent to a 

post-default appointment of a receiver is persuasive, but not necessarily 

dispositive, of the lender’s right to relief. See, e.g., Quality Props. Asset Mgmt. 

Co. v. Sehn Harrison, L.L.C., No. 11-10961, 2011 WL 3329889, at *2 (E.D. Mich. 

Aug. 3, 2011); Mapletree Investors, 2010 WL 1753112, at *3. These courts 

suggest that certain other factors are relevant to the lender’s right to a receiver, 

including, most importantly, the adequacy of the security and the financial position 

of the borrowers. See Mapletree Investors, 2010 WL 1753112, at *3.2

 On balance, 

this Court finds that these additional factors weigh in favor of granting Island 

Living’s request for appointment. Most importantly, Swan Creek has conceded 

that, based on a recent appraisal, the fair market value of the Property is 

substantially lower than the outstanding balance on the Loan and, further, that it 

lacks sufficient resources to repay the Loan. Thus, the security for the Loan and 

Swan Creek’s financial resources are inadequate to ensure Island Living’s right to 

repayment. Moreover, the Court notes that the pending foreclosure-byadvertisement reduces – if not eliminates – Swan Creek’s incentive to maintain, 

                                                            

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 The other factors include (1) any fraudulent conduct by the borrower, (2) 

imminent danger of the property being diminished in value, (3) inadequacy of legal 

remedies, (4) probability that harm to the plaintiff by denial of appointment would 

outweigh injury to the party opposing appointment, (5) plaintiff’s probability of 

success in the action and the possibility of irreparable injury to plaintiff’s interest 

in the property, and (6) whether plaintiff’s interests sought to be protected will in 

fact be well-served by the receivership. See Mapletree Investors, 2010 WL 

1753112, at *3. 

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repair, and invest in the Property. This creates a real risk of the Property being 

diminished in value. In light of this risk, the denial of a receiver would potentially 

harm Island Living. In contrast, because Swan Creek already consented to a 

receiver in the Loan Documents, granting relief would not inflict harm on Swan 

Creek. See id. at *5 (“[Borrower] agreed not to contest receivership appointment 

and there is little harm in enforcing the terms of the parties’ bargain.”) 

Accordingly, the Court concludes that the relevant factors – including Swan Lake’s 

consent to a receiver – weigh in favor of the appointment of a receiver during the 

foreclosure process and redemption period. 

Swan Creek opposes Island Living’s Motion on the grounds that Island 

Living has not satisfied common-law test for the appointment of a receiver. (See 

Resp. Br. at 2-5, Pg. ID 249-252 (citing Hofmeister v. Randall, 335 N.W.2d 65, 67 

(Mich. Ct. App. 1983)).) However, Swan Creek has cited no authority for the 

proposition that this common-law test applies where, as here, a borrower 

contractually agreed, ex ante, to the appointment of a receiver following the 

borrower’s default. Under these circumstances, Swan Creek has failed to 

demonstrate that Island Living is not entitled to the appointment of a receiver. 

CONCLUSION 

 For all the reasons stated in this Order, Island Living’s request for the 

appointment of a receiver is GRANTED. IT IS HEREBY ORDERED that 

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Island Living shall propose, in writing, one or more candidates to serve as receiver 

by no later than January 16, 2015.3

 Island Living shall describe the qualifications 

of the proposed candidate(s) in its submission. IT IS FURTHER ORDERED

that Swan Creek may object to Island Living’s proposed candidate(s), in writing, 

by no later than January 22, 2015. The Court will enter then an order naming and 

specifically defining the powers of the receiver for the Property. 

       s/Matthew F. Leitman 

 MATTHEW F. LEITMAN 

 UNITED STATES DISTRICT JUDGE 

Dated: January 9, 2015 

                                                            

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 Island Living has already proposed one potential receiver to the Court. (See 

Mot. at 2, Pg. ID 157.) That proposed receiver was an individual who worked for 

a company that performs receivership services under these circumstances (the 

"Company"). A representative of the Company (the "Representative") 

accompanied counsel for Island Living to the hearing on this motion. The 

Representative was not the specific individual whom Island Living proposed as the 

receiver; the Representative and the proposed receiver both work with the 

Company. Roughly ten years ago, the Representative and the Court worked as 

attorneys in the same law firm. They have not worked together since at least 

December 1, 2004. They do, however, remain friends. The connection between 

the Representative and the Court played absolutely no role whatsoever in the 

Court's decision to grant the relief described above. Moreover, the Court is 

confident that, notwithstanding its connection to the Representative, it could have 

properly appointed Island Living's proposed receiver – who appears to be wellqualified and well-suited for the position. However, out of an abundance of 

caution – and to remove any possible suggestion that there could arguably be an 

appearance of impropriety if the Court were to appoint an affiliate of the Company 

as receiver – the Court declines to appoint Island Living's proposed receiver as the 

receiver in this action. The Court will appoint as receiver an individual who is not 

connected to the Company. Finally, the Court wishes to make clear that it does not 

believe that Island Living was attempting to influence the Court in any improper 

manner by bringing the Representative to the hearing. 

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I hereby certify that a copy of the foregoing document was served upon the parties 

and/or counsel of record on January 9, 2015, by electronic means and/or ordinary 

mail. 

 s/Holly A. Monda 

 Case Manager 

 (313) 234-5113

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