Filed 1/20/15 Downtown Sunnyvale Residential v. Wells Fargo Bank CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

DOWNTOWN SUNNYVALE 

RESIDENTIAL LLC et al.,

Cross-complainants and Appellants,

v.

WELLS FARGO BANK, N.A., as 

Successor in Interest, etc.,

Cross-defendant and Appellant;

L. GERALD HUNT, as Receiver, etc.,

Respondent.

 H038572

 (Santa Clara County

 Super. Ct. No. 109-CV153447)

DOWNTOWN SUNNYVALE 

RESIDENTIAL LLC et al.,

Cross-complainants,

v.

WELLS FARGO BANK, N.A., as 

Successor in Interest, etc.,

Cross-defendant and Appellant;

L. GERALD HUNT, as Receiver, etc.,

Movant and Respondent.

 H039024

 (Santa Clara County

 Super. Ct. No. 109-CV153447)
2

Downtown Sunnyvale Mixed Use, LLC (DSMU) was the owner and developer of 

the Sunnyvale Town Center (Project), a mixed-use development set to encompass eight 

blocks of residential, retail and commercial space in Sunnyvale, California.1 

Construction on the Project began in 2007, and DSMU invested $350 million, with 

$108.8 million financed by a construction loan provided by Wells Fargo.

2

Two years 

later, the borrowers defaulted. The Project was incomplete and portions of the site 

became vulnerable to weather damage, vandalism, and erosion. 

Subsequently, Wells Fargo began judicial foreclosure proceedings and sought 

appointment of a receiver as provided for in the deed of trust securing its loan. The 

appointed receiver, L. Gerald Hunt, spent approximately $85 million on the Project, the 

bulk of which Downtown Sunnyvale alleges was improperly used on development. In 

2011, Wells Fargo purchased the property at a nonjudicial foreclosure sale and Hunt 

moved for discharge. Overruling objections made by Downtown Sunnyvale, the trial 

court discharged Hunt and ordered Wells Fargo to pay the costs of the receivership 

through the date of discharge. Separately, the court ordered Wells Fargo to pay Hunt’s 

 

1 Downtown Sunnyvale Residential, LLC, Downtown Sunnyvale Mixed Use, 

LLC, SHP San Jose, LLC, and Peter Pau have appealed from the trial court’s order 

discharging the court-appointed receiver (case No. H038572). We refer to the parties in 

their individual capacity when necessary and jointly refer to these appellants as 

“Downtown Sunnyvale” when discussing their arguments on appeal. Wells Fargo is not 

a party to Downtown Sunnyvale’s appeal in case No. H038572. 

Separately, Wells Fargo has appealed from the discharge order and the 

postdischarge order (case No. H039024), raising arguments solely pertaining to the 

apportionment of the receiver’s fees. Downtown Sunnyvale and Wells Fargo’s appeals 

(case Nos. H038572 & H039024) were ordered considered together for the purposes of 

record preparation, briefing, oral argument, and disposition.

2 Wells Fargo Bank, N.A. (Wells Fargo) succeeded Wachovia by merger in the 

action below. Wachovia is referenced numerous times in the record. For clarity, we will 

refer to the bank as “Wells Fargo.”
3

postdischarge fees. Downtown Sunnyvale appealed from the discharge order, and Wells 

Fargo appealed from the discharge order and the postdischarge order. 

On appeal, Downtown Sunnyvale argues Hunt impermissibly used his authority as 

a receiver to develop the Project and breached his duties by failing to remain neutral and 

neglecting to file monthly reports. Wells Fargo claims the trial court erred in requiring 

the bank pay all of Hunt’s fees. 

For the reasons stated below, we conclude the trial court did not err in discharging 

Hunt, because the court’s orders granted Hunt broad authority to manage and improve the 

Project. We also find the court did not abuse its discretion in ordering Wells Fargo to pay 

Hunt’s predischarge and postdischarge fees notwithstanding the existence of some 

equitable factors that may have weighed in favor of apportioning fees to the other parties

to the litigation. We therefore affirm the orders appealed from in both case Nos.

H038572 and H039024.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Project

The Parties

DSMU, the master developer of the Project, held legal title to approximately 19.71

acres of real property that comprised the Project. In 2007, DSMU was formed as a joint 

venture between RREEF and SHP San Jose, LLC (SHP).3 Downtown Sunnyvale 

Residential, LLC (DSR) is a wholly-owned subsidiary of DSMU. Together, DSMU and 

DSR secured a $108.8 million loan from Wells Fargo by a deed of trust dated August 27, 

 

3

SHP owns a 5 percent interest in DSMU. RREEF owns the remaining 95 percent

interest in DSMU. RREEF is comprised of RREEF America REIT III Corp. MM, a 

Maryland corporation, and RREEF America REIT III Corp., MM TRS, a Maryland

corporation. We collectively refer to these entities as “RREEF.” 
4

2007.4 RREEF gave Wells Fargo a written loan guaranty. Pursuant to an agreement with 

DSMU, Peter Pau acted as the development manager for the project. Hunt was appointed 

as the receiver for the Project on October 25, 2009, after the Borrowers’ default. 

Development and Default

In 2007, DSMU was formed to develop and acquire the Project, an eight-block 

mixed-use development consisting of residential, retail, and commercial space in 

Sunnyvale, California. DSMU invested approximately $350 million and obtained a

$108.8 million loan from Wells Fargo. The loan granted Wells Fargo a security interest 

in the Project’s collateral, described in the loan documents as including all buildings, 

improvements, fixtures, building materials, leases, licenses, occupancy agreements, and 

contract rights. 

The deed of trust securing the loan provided certain remedies to Wells Fargo (as 

the administrative agent) in the event of default. One remedy allowed Wells Fargo to 

“apply to any court of competent jurisdiction for the appointment of a receiver for all 

purposes including, without limitation, to manage and operate the [Project] or any part 

thereof, and to apply the Rents therefrom as hereinabove provided. In the event of such 

application, to the extent permitted by applicable law, Trustor [the Borrowers] consents 

to the appointment of a receiver . . . .” The deed of trust securing the loan provided that a 

receiver may “make from time to time all alterations, renovations, repairs or replacements 

to the [Project] as [Wells Fargo] may deem proper.” 

Wells Fargo issued a notice of default to the Borrowers on August 27, 2009, 

demanding full payment of the outstanding principal balance ($108.8 million), accrued 

interest, and incurred costs and expenses. The notice asserted if payment was not 

rendered, Wells Fargo intended to pursue its available remedies.

 

4 We collectively refer to DSMU and its subsidiary DSR as “the Borrowers” and 

refer to each entity in its individual capacity when necessary.
5

On September 25, 2009, Wells Fargo filed a complaint for specific performance, 

breach of security agreements, and judicial foreclosure.5 The complaint alleged the 

Borrowers defaulted by failing to pay the outstanding debt and by failing to remove or 

release the mechanics’ liens filed against the Project. The complaint requested 

immediate appointment of a receiver pursuant to the deed of trust “with the usual powers 

and duties of receivers so appointed, to take possession of the [Project] and the [Project’s 

collateral].” Wells Fargo asserted it was entitled to appointment of a receiver under Code 

of Civil Procedure section 564, subdivision (b)(1), (2), (6) and (9).6 Wells Fargo also 

alleged the Borrowers had expressly consented to appointment of a receiver in the deed 

of trust.

Wells Fargo nominated Hunt to be the receiver. Hunt had experience developing, 

leasing, and managing shopping centers but did not have experience as a receiver. 

Karla Brewer, director of the special situations group with Wells Fargo, submitted 

a declaration supporting the bank’s motion. Brewer said the Project was approximately 

40 to 50 percent complete and was in “a perilous condition.” Many buildings required 

 

5

Pursuant to California law, “there is only ‘one form of action’ for the recovery of 

any debt or the enforcement of any right secured by a mortgage or deed of trust. That 

action is foreclosure, which may be either judicial or nonjudicial. (Code Civ. Proc., §§

725a, 726, subd. (a).)” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 

1236.) Judicial foreclosure can be more expensive and time consuming than nonjudicial 

foreclosure, because it involves oversight by a court. However, in a judicial foreclosure, 

“if the property is sold for less than the amount of the outstanding indebtedness, the 

creditor may seek a deficiency judgment, or the difference between the amount of the 

indebtedness and the fair market value of the property, as determined by a court, at the 

time of the sale.” (Ibid.) In a judicial foreclosure, the debtor also has the statutory right 

to redemption to regain the property by paying the foreclosure sale price for a period of 

time after foreclosure. (Ibid.) In contrast, a nonjudicial foreclosure (a trustee’s sale) can 

be less costly and more efficient. In a nonjudicial foreclosure, the trustee simply 

exercises the power of sale given by the deed of trust. (Ibid.) However, creditors may 

not seek a deficiency judgment and the debtor has no postsale right to redemption. (Ibid.)

6

Further unspecified statutory references are to the Code of Civil Procedure.
6

window, roofing, and caulking work. Other buildings required stuccoing to protect wood 

frames. Structures that had a combination of wood and metal frames needed

weatherization to protect against rust and erosion. There were also significant security 

risks, because there was only one security guard for the nearly 20-acre Project site. 

Brewer believed subcontractors would soon begin removing protective equipment from 

the construction area. 

2. The Receiver’s Appointment

Wells Fargo’s Ex Parte Motion to Appoint a Receiver 

On October 5, 2009, Wells Fargo moved ex parte to appoint a receiver. Wells 

Fargo had learned the general contractor had terminated its agreement with DSMU and 

life-safety equipment was being removed from the site. Wells Fargo stated that due to 

the “imminent risks to the Project and to the general public,” a receiver should be 

appointed to “quickly institute reasonable and appropriate measures to secure the Project 

and to minimize the safety risks” and to “perform the weatherization and other duties” as 

well as “any other items [the receiver] deems necessary in his business judgment to 

protect the Project.” Wells Fargo clarified it was willing and prepared to make loan 

advances to the receiver.

The trial court granted Wells Fargo’s ex parte motion and appointed Hunt as the 

receiver. Hunt was to take immediate possession, custody, and control of the Project and 

all collateral securing the Borrower’s obligations to Wells Fargo under the loan 

documents and was given “all powers, duties and authorities as are provided by law to 

take possession of, use, operate, manage and control the Collateral, to collect and receive 

any and all rents, profits and other income from the Collateral, to protect, preserve, 

maintain and improve the Collateral, and to incur expenses that are necessary and 

appropriate toward those ends.” (Italics added.)
7

The appointment order broadly granted Hunt powers including but not limited to: 

(1) the ability to enter and gain access to the Project and to take possession and control of 

all of the Project’s collateral, (2) to operate, manage, and control the Project, (3) to do all 

things “necessary and appropriate to care for, preserve, protect, secure, and maintain the 

Collateral, including but not limited to completing weatherization and general protection 

to any improvements, completing the installation and ensuring the operation of fire 

sprinklers, ensuring the physical security of the Collateral, ensuring that the Project does 

not create unreasonable risks to public health and safety, and to otherwise preserve and 

protect the Collateral from harm, erosion, deterioration, theft and vandalism,” (4) to 

demand, collect, and receive rents, (5) to execute and prepare documents and perform any 

and all acts “necessary to fulfilling the Receiver’s duties, including preserving, 

protecting, managing and controlling the Collateral,” (6) to negotiate with government 

agencies and adjoining landowners, and to the extent deemed necessary or advisable, 

complete construction of improvements on the project, (7) to do all things necessary and 

appropriate to ensure timely compliance with the Project’s ownership and development 

obligations, and (8) to assume the Borrower’s rights and responsibilities under any 

easements, developments, construction, lease, or other agreements relating to the Project 

to the extent the receiver deems it necessary to do so.

The appointment order allowed Wells Fargo to make advances to Hunt for 

expenses incurred during the performance of his duties. The order expressly stated that 

“[a]ll advances so made by [Wells Fargo] to the Receiver shall constitute secured 

advances” and would have the same lien priority as the initial loan advance secured by 

the deed of trust in 2007. The appointment order also authorized the receiver to issue 

receiver certificates that would have the same lien priority as the initial loan advance 

secured by the deed of trust. The appointment order did not contain language requiring

the receiver obtain court approval before recording receiver certificates.
8

Subsequent Court Orders

On November 3, 2009, the trial court issued a clarifying order specifying 

“advances by [Wells Fargo] to the receiver to protect the [Project] shall have a lien 

priority on par with [Wells Fargo’s] existing deed of trust” and maintaining the 

appointment order without modification. 

On May 6, 2010, Hunt filed an ex parte application requesting confirmation he had 

authority to execute a lease agreement with Nokia. Hunt also asserted he had negotiated 

a modification to the amended and restated disposition and development owner 

participation agreement (ARDDOPA) and related documents in order to resolve issues 

with entitlements. Hunt’s request was granted on May 6, 2010. 

Additionally, Hunt moved ex parte for a confirmation he could execute and 

perform obligations under a settlement agreement reached with Target Corporation and 

Red Tail LLC.7 He also filed an ex parte application to confirm his authority to execute 

certain agreements to be recorded with Santa Clara County. The court granted Hunt’s ex 

parte applications in June 2010. 

Hunt’s Motion for Order to Sell Property “Free and Clear of Liens”

On September 9, 2010, Hunt filed a motion requesting that the court grant him 

authority to sell the Project “free and clear of liens and encumbrances.” Hunt sought 

court approval to obtain a broker, to seek and negotiate offers, and have proposed final 

sales contracts approved by the court through an expedited application process. No 

opposition was filed. 

The following month, the trial court granted the motion and gave Hunt the 

authority to broker a deal to sell the Project subject to court approval. 

 

7

Target and Red Tail had filed a lawsuit seeking compensation for construction 

improvements they had completed.
9

3. The Answer and Cross-complaint

On May 16, 2011, Downtown Sunnyvale filed an answer to Wells Fargo’s 

September 2009 complaint for specific performance and judicial foreclosure, denying 

each of the allegations and raising affirmative defenses. That same day, Pau sent a 

Wozab8 warning letter to Wells Fargo, purportedly on behalf of himself and the 

Borrowers.

9

 

Downtown Sunnyvale also filed a cross-complaint against Wells Fargo, alleging 

Wells Fargo had violated section 726.

10

 The cross-complaint further alleged RREEF and 

Wells Fargo purportedly entered a secret and collusive agreement whereby Wells Fargo 

agreed to accept a $16 to $18 million settlement from DSMU to relieve RREEF from the 

guaranty of the $108.8 million loan. The cross-complaint asserted Hunt did not act fairly 

toward bidders during the sale, and Hunt refused to consider SHP’s competitively-priced 

bids to purchase the property. Wells Fargo filed a special motion to strike the crosscomplaint pursuant to California’s anti-SLAPP11 statute (§ 425.16). The trial court 

granted Wells Fargo’s anti-SLAPP motion, and the Borrowers and SHP appealed. On 

October 17, 2013, we affirmed the trial court’s order in an unpublished opinion. 

(Downtown Sunnyvale Residential, LLC v. Wachovia Bank National Association (Oct. 17, 

2013, H037419) [nonpub. opn.].)

On May 18, 2011, Downtown Sunnyvale filed an application to modify the 

instructions to the receiver regarding the sale of the Project. The application sought an 

 

8

Security Pacific National Bank v. Wozab (1990) 51 Cal.3d 991.

9

There is some dispute below as to whether Pau was in control of the Borrowers.

10 On May 27, 2011, an amended cross-complaint was filed, containing largely the 

same allegations. Seven months later, the parties filed a second amended crosscomplaint, with the same allegations. 

11 “SLAPP” stands for “ ‘strategic lawsuits against public participation.’ ” 

(Navellier v. Sletten (2002) 29 Cal.4th 82, 85.) 
10

order from the court instructing Hunt to stop his efforts to sell the Project and informing

Hunt he did not have and could not be granted the authority to sell under California law. 

A week later, Hunt filed a motion requesting the court approve a proposed sale, 

which Downtown Sunnyvale opposed. Hunt’s motion asserted he had entered into a 

purchase contract for the Project with several entities. The purchase price was below the 

amount of outstanding debt owed to Wells Fargo.

On June 15, 2011, the trial court granted Downtown Sunnyvale’s motion to 

modify instructions to the receiver and denied Hunt’s motion to confirm the sale of the 

Project without prejudice. The order concluded that “[p]ending a settlement agreement, 

final judgment or foreclosure decree, the October 12, 2010 order granting receiver the 

authority to sell the receivership property, etc. is premature.”

In August 2011, the Project was sold at a nonjudicial foreclosure sale. Wells 

Fargo (the sole bidder) placed a credit bid of $108.8 million, the principal amount of the 

construction loan. The Project was turned over to Wells Fargo on October 4, 2011. 

4. Discharge of the Receiver

Hunt’s Final Account and Request for Discharge

On November 4, 2011, Hunt filed a notice of his final account and requested

approval of his fees, exoneration of bonds, and discharge of all claims against him and 

the receivership estate. Hunt asserted that during the course of the receivership, Wells 

Fargo had advanced approximately $80,219,000 to “stabilize, secure, protect and 

weatherize the Project, to resolve and pay mechanic’s liens, to resolve lawsuits and other 

claims, to secure, capitalize and deliver a valuable lease with Nokia, Inc., to obtain 

regulatory closure for certain areas within the Project and obtain approvals to ensure the 

proper future remediation and monitoring of the toxic contamination for the remaining 

affected areas, and thereby reasonably quantify the costs to fully address the 

contamination issue, to obtain adequate insurance coverage for Project improvements and 
11

constituents, and to negotiate and re-establish the entitlements for the Project . . . under 

the specific authority of this Court’s October 5, 2009 [appointment order].” 

Although no rents were payable during the receivership, Hunt asserted he had 

identified, pursued, and collected funds derived from the Project from various third 

parties, including negotiated refunds and reimbursements.

Hunt claimed he had given RREEF and the Borrowers documentation regarding

the receivership’s expenditures and had provided Pau with the same documents after Pau 

purported to act on behalf of the Borrowers. These documents included invoices from 

Hunt, invoices from Hunt’s counsel, financial records regarding the resolution of 

mechanics’ liens, costs associated with the Nokia lease, property tax records, records 

reflecting cost of environmental remediation, and bills for landscaping, security, Pacific 

Gas and Electric, and water. Hunt admitted in a deposition that although he prepared

internal monthly accounting reports, he did not give these reports to the parties. 

However, he submitted periodic reports detailing the receivership’s finances to Wells 

Fargo when the receivership needed funds. 

The Discovery Process

In November 2011, Downtown Sunnyvale sent a letter to Hunt’s counsel 

requesting discovery regarding the final accounting. Downtown Sunnyvale also sent a 

letter brief to the discovery referee, who issued an order granting some of the requests. 

Later, Hunt claimed these discovery requests amounted to more than 20,000 documents 

or 100,000 pages worth of material covering the receivership’s activities. Hunt and his 

authorized representative were deposed for a total of seven days. 

Hunt filed a motion to disqualify Downtown Sunnyvale’s counsel, which the trial 

court granted in March 2012 after concluding attorneys at the firm Downtown Sunnyvale

employed had been “personally involved in providing legal advice and services to the 

receiver.” 
12

The Interim Funding Order and Objections to Hunt’s Discharge

In March 2012, Downtown Sunnyvale filed a letter brief insisting it had the legal 

right to request an evidentiary hearing on Hunt’s final account. The letter argued there 

were numerous factual disputes regarding the accounting, including: (1) whether Wells 

Fargo “converted a rents and profits Receiver with a minimal bond into a functional 

general equity Receiver to act on behalf of the borrower entities and to actually sell the 

property through the Receiver sale process,” (2) whether Hunt’s actions chilled the 

bidding process for the property, (3) whether Hunt colluded with Wells Fargo and 

RREEF to deny SHP and Pau equitable rights to the Property and purposefully ignored 

Pau’s bids to purchase the Property, (4) whether Hunt overencumbered the Project when 

he accumulated over $85 million in receiver’s certificates and liens, (5) whether Hunt 

improperly and in excess of his authority spent money to settle junior liens, (6) whether 

Hunt improperly spent money and time in pursuing a receiver’s sale, and (7) whether 

Hunt “exceeded his authority in negotiating and entering into [a] myriad of agreements” 

as set forth in his final accounting. 

The following month, Hunt sought ex parte for a briefing schedule to address 

funding the receivership estate. He also requested approval to employ special counsel. 

In an accompanying declaration, Hunt’s attorney claimed the funds in the receivership 

estate had been exhausted and Hunt had run out of money to pay for fees, vendors, 

consultants, attorneys, and other items necessary for him to perform his duties under the 

court’s appointment order. The court permitted Downtown Sunnyvale to submit 

authorities on the matter, and Downtown Sunnyvale maintained Wells Fargo was 

obligated to pay the costs of the receivership. 

In April 2012, the court held a hearing and stated it believed “to the extent that 

there’s an order regarding payment to the receiver, it should be the obligation of the party 

that requested [the appointment of the receiver] in the first place up until the point of the 
13

discharge.” At one point during the hearing, the court acknowledged Wells Fargo’s 

argument that the court retained the discretion to charge any party to the litigation with 

the receiver’s costs. However, the court reiterated that its inclination was that Wells 

Fargo ought to pay the receiver’s expenses. 

On April 20, 2012, the trial court entered an order approving the receiver’s request 

to employ special counsel and specifying Wells Fargo was to pay the receivership costs

through the date of discharge. The order noted the receivership was established pursuant 

to Wells Fargo’s request and the “continued necessity for the receivership was abrogated 

by [Wells Fargo’s] decision to proceed with non-judicial foreclosure rather than pursue 

its claim for judicial foreclosure.”

The Discharge Order

In May 2012, Downtown Sunnyvale formally objected to Hunt’s final account.

12

The same month, the trial court accepted Hunt’s final account and discharged him, 

overruling Downtown Sunnyvale’s objections. The court rejected Downtown 

Sunnyvale’s argument that Hunt was limited to protecting and preserving the property. 

The trial court noted that Downtown Sunnyvale “question[s] the propriety of the 

broad power given to the receiver pursuant to the Appointment Order and subsequent 

orders, but the court’s role in this instant motion is not to question or reconsider the 

propriety of these prior orders. The court’s function now is limited to determining 

 

12 The allegations included: (1) Hunt had violated his duties as a receiver when he 

sought to sell the property pursuant to the receiver’s sale, (2) Hunt did not follow the 

appointment order by limiting his role to that of a “rents and profits” receiver and 

improperly pursued development of the Property in collusion with Wells Fargo, (3) Hunt 

violated California Rules of Court, rule 3.1182(a) and the appointment order by failing to 

serve the parties monthly reports, (4) Hunt violated his duty to act as an independent and 

neutral receiver because his allegiance was to Wells Fargo, (5) Hunt nearly doubled the 

debt burden on the Property by spending approximately $89 million in pursuing 

development, (6) Hunt chilled the bidding on the foreclosure sale, and (7) Hunt’s fees (in 

excess of $1 million) were unreasonable and excessive.
14

whether the receiver acted within the scope of the Appointment Order and subsequent 

order. In view of the express authority granted to the receiver by the Appointment Order 

and subsequent orders, the court finds the receiver did not act outside the scope of his 

given authority.” 

Additionally, Downtown Sunnyvale had alleged Hunt failed to properly carry out 

his duties because he did not submit monthly reports and failed to act neutrally in his role 

as a receiver. The trial court rejected these claims, concluding Downtown Sunnyvale did 

not show it had been prejudiced by Hunt’s failure to file monthly reports and had not 

adequately shown Hunt chilled bidding during the sale process.

Subsequently, the court approved Hunt’s fees and ordered Wells Fargo to pay the

remaining unpaid costs of the receivership through the entry of the order. 

The Motion to Reconsider and Application for Postdischarge Fees and Costs

On June 18, 2012, Downtown Sunnyvale filed a motion to reconsider the 

discharge order, which the court deemed untimely. 

Thereafter, Hunt filed a fee application with the court, itemizing his postdischarge

fees, with the bulk of the fees attributed to Downtown Sunnyvale’s legal actions. Hunt 

also asserted he had incurred approximately $72,346.64 in performing other necessary 

postdischarge tasks such as preparing his final accounting, reviewing and analyzing the 

discharge order, and responding to press inquiries. Hunt recommended the trial court 

exercise its discretion and apportion $144,890.88 of the fees and costs to Downtown 

Sunnyvale and $36,173.32 of the fees and costs to Wells Fargo. 

On October 11, 2012, the trial court entered an order on Hunt’s postdischarge fees 

and costs. The trial court acknowledged its discretion to apportion fees to different 

parties in the litigation but concluded Wells Fargo was the primary beneficiary of the 

receivership estate and should bear the burden of the receiver’s costs. The court further 
15

determined that some of Hunt’s costs were not reasonable and reduced his fees by 20

percent. Wells Fargo appealed the postdischarge order. 

DISCUSSION

I. Downtown Sunnyvale’s Appeal

Downtown Sunnyvale argues the court erred in discharging Hunt and terminating 

the receivership, because proper interpretation of the appointment order under California 

law and the provisions of the deed of trust meant Hunt was granted only limited powers 

as a rents and profits receiver. For the reasons set forth below, we disagree with 

Downtown Sunnyvale’s characterization of the receivership and affirm the discharge 

order.

1. Failure to Appeal from the Appointment Order

First, we address the threshold issue of appealability. Hunt asserts Downtown 

Sunnyvale’s objections to the scope of the appointment order are not cognizable on this 

appeal from the discharge order, because Downtown Sunnyvale did not appeal from the 

appointment order, which was appealable under section 904.1, subdivision (a)(7). (See 

Pacific Broadcasting Co. v. Superior Court (1929) 100 Cal.App. 649, 651.) 

It is well-settled that “if an order is appealable, appeal must be taken or the right to 

appellate review is forfeited.” (In re Baycol Cases I & II (2011) 51 Cal.4th 751, 761, fn.

8.) California law mandates that if an appeal is taken pursuant to sections 904.1 or 904.2, 

a reviewing court may consider any intermediate ruling, proceeding, order, or decision 

implicating the merits or affecting the judgment or order that is appealed. (§ 906.) 

However, a reviewing court is not authorized to review an order or decision from which 

an appeal might have been taken. (Ibid.) Therefore, on appeal from the trial court’s 

order discharging Hunt as a receiver, we may not review the trial court’s order 

appointing Hunt as the receiver.
16

Downtown Sunnyvale maintains it is not appealing the appointment order, but the 

discharge order. We agree to the extent Downtown Sunnyvale’s argument here on appeal 

is that the trial court’s discharge order improperly interpreted the scope of Hunt’s 

authority under the appointment order and the court’s subsequent orders. While this 

seems like an order attacking the validity of the appointment order, it is not--it is a 

challenge to the trial court’s interpretation of the law when it discharged Hunt. 

However, some of Downtown Sunnyvale’s contentions appear to be collateral 

attacks on the appointment order. We will not review these claims. If the appointment 

order granted Hunt authority to develop and improve the Project, Downtown Sunnyvale 

has forfeited its assertion that this grant of power was made in error. (Rios v. Allstate Ins.

Co. (1977) 68 Cal.App.3d 811, 818 [“A collateral attack is one to prevent enforcement of 

a judgment or to defeat rights acquired under it.”].) 

Accordingly, we confine ourselves to reviewing whether the court erred in 

discharging Hunt based on an erroneous interpretation of the appointment order, and if 

the court abused its discretion in concluding Hunt did not breach his fiduciary duties. 

2. Statutory Framework and Standard of Review

Preliminarily, we review the statutory framework regarding receiverships and our

applicable standard of review. 

“A receiver is a person appointed by a court to take possession of property that is 

the subject of litigation, to manage and preserve it, and to dispose of it according to the 

orders of the court.” (11 Miller & Starr, Cal. Real Estate (3d ed. 2009) § 33:2, p. 33-5, 

fns. omitted.) “[S]ection 564 contains a principal source of authority for trial courts to 

appoint receivers. . . . [¶] The requirements of . . . section 564 are jurisdictional, and 

without a showing bringing the receiver within one of the subdivisions of that section the 

court’s order appointing a receiver is void.” (Turner v. Superior Court (1977) 72 

Cal.App.3d 804, 811, fn. omitted (Turner).) Receivers can be appointed in “all other 
17

cases where necessary to preserve the property or rights of any party” (§ 564, subd.

(b)(9)), including when a deed of trust specifically contracts for a receiver upon a

borrower’s default. (Barclays Bank of California v. Superior Court (1977) 69 

Cal.App.3d 593, 599-600 (Barclays Bank).)

Once a court appoints a receiver, “[i]t is the rule that: ‘The functions and powers 

of a receiver are controlled by statute, by the order appointing him, and by orders 

subsequently made by the court. He has no powers beyond those so conferred.’ (42 

Cal.Jur. 2d, Receivers, § 73; and see authority there collected.)” (Morand v. Superior 

Court (1974) 38 Cal.App.3d 347, 351 (Morand).) “Where a receiver’s powers and duties 

are not directly prescribed by statute, they are dependent upon the court’s order of 

appointment.” (Nulaid Farmers Assn. v. LaTorre (1967) 252 Cal.App.2d 788, 791.) A 

receiver’s powers “ ‘may be expanded or contracted by subsequent court order.’ ” 

(Resolution Trust Corp. v. Bayside Developers (9th Cir. 1994) 43 F.3d 1230, 1242 

(Resolution Trust Corp.), citing to Cal-American Income Property Fund VII v. Brown 

Development Corp. (1982) 138 Cal.App.3d 268, 273 (Cal-American).) However, there 

are certain limits to the scope of a receiver’s powers. For example, a court cannot grant a 

receiver authority to take possession of property that is not hypothecated in a deed of 

trust. (Turner, supra, 72 Cal.App.3d at p. 816.)

A trial court is awarded great discretion in appointing, administering, and 

discharging receivers. Therefore, we review the trial court’s order discharging Hunt for 

abuse of discretion. (See City of Santa Monica v. Gonzalez (2008) 43 Cal.4th 905, 931; 

Sly v. Superior Court (1925) 71 Cal.App. 290, 294; Macmorris Sales Corp. v. Kozak

(1967) 249 Cal.App.2d 998, 1005.) “An abuse of discretion occurs ‘where, considering 

all the relevant circumstances, the court has exceeded the bounds of reason or it can fairly 

be said that no judge would reasonably make the same order under the same 

circumstances.’ ” (In re Marriage of Olson (1993) 14 Cal.App.4th 1, 7.)
18

Downtown Sunnyvale contends we should apply a de novo standard of review to 

certain issues, including whether the trial court erred in failing to apply section 564 when 

interpreting its prior receiver orders and whether the trial court erred in failing to apply 

section 568 and applicable foreclosure laws when evaluating the propriety of Hunt’s 

actions. However, whether we apply a de novo standard of review or an abuse of 

discretion standard of review is irrelevant in this context; if the trial court failed to apply 

the applicable law, it would be a clear abuse of discretion. But to the extent our analysis

relies on pure questions of law, including statutory interpretation, we apply a de novo 

standard of review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799-801.)

3. Proper Interpretation of the Receiver’s Powers

Downtown Sunnyvale claims the trial court improperly interpreted the scope of 

the receivership to include powers extending beyond that of a rents and profits receiver

and therefore erred when it discharged Hunt. This argument requires us to determine the 

scope of the receivership estate and Hunt’s powers. If, as Downtown Sunnyvale 

surmises, Hunt was appointed by the court as a limited purpose rents and profits receiver 

and was not permitted to develop or improve the Project, then the court erred in 

discharging him. 

As we explain below, California law, the relevant portions of the deed of trust, the 

court’s appointment order, and the court’s subsequent orders all support the trial court’s

conclusion that Hunt acted within the scope of his authority during the course of the 

receivership. 

a. The Receivership Estate

First, we determine that Hunt was appointed as a receiver over the Project and the 

Project’s collateral, which broadly included all leases, buildings, and contract rights. 

The deed of trust provided that in the event of a default, Wells Fargo could apply 

to the trial court to appoint a receiver “for all purposes including, without limitation, to 
19

manage and operate the [Project] or any part thereof, and to apply the Rents therefrom as 

hereinabove provided.” (Italics added.) The collateral, which Wells Fargo possessed a 

security interest, was described as including a multitude of items including all buildings 

and improvements, all fixtures, all building materials, all leases, licenses, or occupancy 

agreements, and all contract rights.13

Indeed, the court’s appointment order charged Hunt with taking possession of all 

of the collateral as described in the loan documents. Wells Fargo’s initial complaint for 

judicial foreclosure also specifically requested appointment of a receiver “with the usual 

powers and duties of receivers so appointed, to take possession of the Sunnyvale [Project]

and the Sunnyvale Collateral.” 

Therefore, the Project and the Project’s collateral comprised the receivership 

estate. 

b. Hunt’s Powers Determined by Court Orders and Statute

Next, we must examine the scope of Hunt’s authority as a receiver. It is well 

settled that once the power to appoint a receiver exists and the receiver is appointed, his 

“functions and powers are controlled by statute, by the order appointing him, and by the 

court’s subsequent orders.” (Cal-American, supra, 138 Cal.App.3d at p. 273.) “Where a

receiver’s powers and duties are not directly prescribed by statute, they are dependent 

upon the court’s order of appointment.” (Nulaid Farmers Assn. v. LaTorre, supra, 252 

Cal.App.2d at p. 791.) 

 

13 Downtown Sunnyvale claims that the deed of trust’s provisions limited Wells 

Fargo’s security interest to “the Property, related personal property, and advances 

necessary to protect the security--not ‘all-you-can-eat’ servings from the Borrower’s 

equity.” We reject this contention based on the language of the deed of trust. Contrary to 

Downtown Sunnyvale’s claims, the deed of trust clearly granted Wells Fargo a security 

interest in additional items including contract rights, leases, and licenses related to the 

Project. 
20

Here, the trial court’s orders clearly granted Hunt powers beyond collecting rents 

and profits and protecting the property. In its appointment order, the trial court granted 

Hunt “all powers, duties and authorities as are provided by law to take possession of, use, 

operate, manage and control the Collateral, to collect and receive any and all rents, profits 

and other income from the Collateral, to protect, preserve, maintain and improve the 

Collateral, and to incur expenses that are necessary and appropriate toward those ends.” 

(Italics added.) The appointment order also granted Hunt the authority to assume the 

Borrower’s rights and responsibilities under any easements, developments, construction, 

lease, or other agreements relating to the Project to the extent Hunt deemed it necessary 

to do so. The trial court granted Hunt even more powers in its subsequent order

confirming the execution of the lease with Nokia. 

Nonetheless, despite the broad grant of authority expressly given to Hunt in the 

court’s orders, Downtown Sunnyvale maintains the court should have interpreted its prior 

orders as granting Hunt authority limited to preserving and protecting the property as a

rents and profits receiver. 

First, Downtown Sunnyvale insists the court’s November 2009 order clarifying 

lien priorities properly interpreted the scope of Hunt’s authority as limited to protection 

and preservation. This argument is premised on a line in the court’s order stating: “It is 

the order of the court that advances by [Wells Fargo] to the receiver to protect the 

[Project] shall have a lien priority on par with [Wells Fargo’s] existing deed of trust. The 

order entered on October 5, 2009 [the appointment order] shall remain in effect without 

modification.”

While the order does reference advances meant to “protect” the property, the order 

also expressly states that the October 2009 appointment order, gave Hunt authority to 

manage the Project, would remain in effect without any changes. We therefore reject any 

claim that the clarifying order somehow limited the earlier appointment order or 
21

suggested the appointment order should be interpreted as restricting Hunt’s powers to 

protection. 

Additionally, even if the appointment order was not broad enough to grant Hunt 

certain powers, Hunt sought court approval before undertaking many of his major 

activities, including executing the lease with Nokia and negotiating settlements with 

Target and Red Tail. The court ratified these actions by confirming them in its orders 

granting his ex parte motions. Therefore, there can be no complaint that Hunt committed 

any unauthorized acts. (See People v. Riverside University (1973) 35 Cal.App.3d 572, 

581-582.)

However, Downtown Sunnyvale maintains that receivers in foreclosure actions 

possess limited powers and devotes a section of its opening brief differentiating between 

various categories of receiverships. For example, Downtown Sunnyvale claims a 

receiver in a foreclosure action authorized under section 564, subdivision (b)(2), (9), (11)

or (12) is only permitted to protect, preserve and maintain the security and to collect any 

rents and profits, while an equity receiver authorized under section 564, subdivision

(b)(6) is only permitted to manage a corporation to satisfy creditors out of the 

corporation’s assets. Therefore, Downtown Sunnyvale insists the trial court should have 

interpreted the appointment order as granting Hunt powers restricted to protecting, 

preserving, or maintaining the security, because “[t]he appointing court’s jurisdiction 

pursuant to § 564’s secured lender provisions was limited to ‘where necessary to preserve 

the property or rights of any party.’ (C.C.P. § 564(b)(9).)” 

This interpretation of section 564 lacks merit. Section 564 states that “[a] receiver 

may be appointed by the court in which an action or proceeding is pending, or by a judge 

thereof, in the following cases” (§ 564, subd. (b)), including “[i]n all other cases where 

necessary to preserve the property or rights of any party” (id., subd. (b)(9)). Section 564 

does not limit a receiver’s authority upon appointment. There is nothing in the statute to 
22

suggest if appointment of a receiver is “necessary to preserve the property or rights of 

any property or rights of any party,” a court is thereafter restrained to granting a receiver 

authority only to preserve and protect.

Furthermore, none of the cases cited by Downtown Sunnyvale lend support to its 

contention that a court is limited to granting only certain powers to receivers in 

foreclosure actions. (See Barclays Bank, supra, 69 Cal.App.3d at p. 600 [holding that 

because deed of trust provided for appointment of receiver, beneficiary was not required 

to make a showing that the property was insufficient to discharge mortgage debt prior to 

appointment]; Marsch v. Williams (1994) 23 Cal.App.4th 238, 249 [concluding that an 

arbitrator was not empowered to appoint a receiver despite agreement of both parties 

because there is no statutory authorization for such an appointment]; Turner, supra, 72 

Cal.App.3d at p. 816 [holding that a court cannot grant a receiver authority to take into 

possession property not hypothecated in the deed of trust].) 

Importantly, a receiver’s powers are not determined based on a broad 

categorization as a rents and profits receiver or an equity receiver. Courts have 

acknowledged that a receiver’s “functions and powers are controlled by statute, by the 

order appointing him, and by the court’s subsequent orders.” (Cal-American, supra, 138 

Cal.App.3d at p. 273.) Accordingly, while there may be such a thing as a “rents and 

profits receiver” or an “execution receiver,” these receivers’ powers are not restricted due 

to a jurisdictional boundary set forth under section 564, but are limited due to a court’s 

appointment and subsequent orders.14 Furthermore, a receiver’s functions and powers, 

dictated by court order, can be modified since courts retain flexibility to change 

 

14 However, the requirements of section 564 are jurisdictional in the sense that 

“without a showing bringing the receiver within one of the subdivisions of that section 

the court’s order appointing a receiver is void.” (Turner, supra, 72 Cal.App.3d at p. 811.) 
23

instructions or alter previous orders as circumstances require. (See Lesser & Son v.

Seymour (1950) 35 Cal.2d 494, 499.)

We therefore conclude that under the applicable statutes, the appointment order, 

and the court’s subsequent orders, Hunt was granted broad authority to “take possession 

of, use, operate, manage and control the Collateral” as well as to “protect, preserve, 

maintain and improve the Collateral.” (Italics added.) The language in the court’s 

appointment order and its subsequent orders confirming Hunt’s authority does not 

support Downtown Sunnyvale’s narrow interpretation of the receiver’s powers. 

c. Additional Claims

Additionally, Downtown Sunnyvale raises a myriad of arguments attacking the 

validity of the discharge order’s interpretation of Hunt’s powers. We address each of 

these claims and explain why we reject them. 

Receiver’s Actions Barred by Law

First, Downtown Sunnyvale opines that a receiver is not allowed to take actions 

barred under the relevant statutes, and we agree. However, we disagree with Downtown 

Sunnyvale’s assertion that the court’s interpretation of the appointment order 

inadvertently granted Hunt powers proscribed under the relevant statutes. 

For example, in Morand, supra, 38 Cal.App.3d 347, an appellate court concluded 

a receiver who was authorized to take whatever action necessary to obtain property on 

behalf of a judgment debtor was not allowed to file a claim for declaratory relief against 

several defendants that were in possession of assets that could be paid to the judgment 

debtor. (Id. at pp. 351-353.) The court noted that under the law, a receiver could only be 

authorized to commence actions if authorized by statute or by “ ‘special’ ” or “ ‘express’

” permission of the appointing court. (Ibid.) Because the action was not authorized by 

statute and the court did not give “ ‘special’ ” or “ ‘express’ ” permission, the receiver 

was not permitted to pursue his lawsuit. (Ibid.) 
24

Unlike Morand, the appointment order at issue here did not grant Hunt powers 

circumventing laws. And, as we previously discussed, section 564 does not act as a 

jurisdictional limit to a receiver’s authority. Furthermore, Hunt’s actions to develop or 

improve the Project were not otherwise prohibited by law. 

Retroactive Expansion of the Deed of Trust

Downtown Sunnyvale also argues the court’s interpretation of the discharge order 

retroactively expands the scope of the deed of trust. (See Oxford Street Properties, LLC 

v. Rehabilitation Associates, LLC (2012) 206 Cal.App.4th 296, 308-309.) Downtown 

Sunnyvale insists the reasonable intent and expectations of the parties, detailed in its 

communications with the bank and the receiver, was that a receiver would be appointed 

solely to protect and preserve the property.

However, the express language of the deed of trust contradicts Downtown 

Sunnyvale’s assertions regarding the parties’ reasonable expectations. The deed of trust 

expressly defined the collateral, granting Wells Fargo a security interest in more than the 

Project’s rents and profits. It also set forth that in the event of a default, Wells Fargo 

could “apply to any court of competent jurisdiction for the appointment of a receiver for 

all purposes including, without limitation, to manage and operate the [Project] or any part 

thereof, and to apply the Rents therefrom as hereinabove provided.” (Italics added.) This 

language demonstrates the parties had consented to a receiver “for all purposes,” which 

included managing the Project. 

Given that the parties agreed to a receiver with broad powers in the deed of trust, it 

is illogical to conclude that Downtown Sunnyvale had a reasonable expectation that an

appointed receiver would be a limited-purpose rents and profits receiver. Therefore, the 

trial court did not impermissibly expand the scope of Hunt’s powers and duties as 

understood by the parties.
25

Wells Fargo’s Complaint for Judicial Foreclosure

Downtown Sunnyvale also maintains we should interpret the scope of the 

receiver’s powers by looking to Wells Fargo’s complaint for judicial foreclosure, which 

requested a receiver to “facilitate the development, marketing, leasing or maintaining” of 

the Project. Downtown Sunnyvale asserts this language only contemplates the receiver’s 

facilitation of later development to the Project, not current improvements. 

As we previously noted, the express language of the appointment order clearly 

granted Hunt broad powers to improve the Project. No appeal was taken from the 

appointment order. Downtown Sunnyvale’s failure to appeal from the appointment order

has forfeited its argument that the appointment order impermissibly granted Hunt powers 

beyond that of a rents and profits receiver because that would amount to a collateral 

attack on an appealable judgment. (§ 906.) 

Additionally, we would reject Downtown Sunnyvale’s claim that a rents and 

profits receiver cannot be granted additional powers by a court if we were to consider it 

on its merits. The proper scope of a receiver’s authority has been discussed in several 

cases including Resolution Trust Corp., supra, 43 F.3d 1230, a federal case that applied 

California law. In Resolution Trust Corp., a trial court appointed a receiver for a 

townhouse development and authorized the receiver to “ ‘collect all rents from the 

subject property, manage said real property and from the rent proceeds protect, conserve 

and maintain said real property.’ ” (Id. at p. 1242.) The trial court also authorized the 

receiver to “ ‘perform all acts to protect and conserve and maintain said real property in 

the same manner as would the owner protect the property’s best interest.’ ” (Ibid.) The 

Ninth Circuit concluded the trial court’s orders created more than a receivership over the 

rents and profits derived from the property and encompassed the power to sell and carry 

out pending sales agreements. (Id. at pp. 1242-1243.)
26

In Turner, supra, 72 Cal.App.3d 804, the trial court appointed a rents and profits 

receiver upon request of a beneficiary under a deed of trust. (Id. at p. 807.) The deed of 

trust mandated that upon default, the beneficiary could obtain a receiver to “ ‘enter into 

possession and hold, occupy, possess and enjoy the property,’ ” and to “ ‘take, receive 

and collect all or any part of the rents, issues, profits, royalties, tolls, earnings, income 

and installments’ ” as they became available. (Id. at p. 808.) After a hearing, the court 

appointed a receiver to take possession of the real property and collect rents. The court 

further authorized the receiver to operate and conduct the business of managing, 

maintaining and collecting rent, and to “employ labor as may be necessary, purchase 

supplies and to incur the risk and obligations ordinarily incurred by owners, managers 

and operators of similar businesses.” (Id. at p. 809.) Thereafter, pursuant to the 

receiver’s motion, the court authorized the receiver to sell the property subject to 

confirmation. (Id. at p. 810.)

The Court of Appeal in Turner reversed the trial court’s order authorizing the sale, 

finding the trial court erred in “purporting to imbue the rents and profits receiver with 

authority to take into his possession any property . . . which is not hypothecated under the 

deed of trust without the consent of those entitled to give or withhold consent.” (Turner, 

supra, 72 Cal.App.3d at p. 816.) Accordingly, the appellate court determined the trial 

court’s order authorizing the sale was beyond the power of the court and concluded it 

“need not reach or decide the question of the limits upon the rents and profits receiver’s 

authority to sell the receivership estate consisting of the security only under the 

circumstances of this case.” (Id. at p. 819.)

In Cal-American, supra, 138 Cal.App.3d 268, the plaintiff argued the trial court 

had appointed a “ ‘rents and profits’ ” receiver, and that the receiver’s powers were 

expressly limited to the express terms of the appointment order. Therefore, the plaintiff 

argued that the trial court had erred in confirming the sale of the subject property. (Id. at 
27

p. 273.) The appellate court concluded that although the original stipulation requesting 

appointment of a receiver did not expressly refer to the receiver’s authority to sell 

property, it did not preclude the possibility of a sale. (Id. at p. 274.) Additionally, the 

trial court’s order appointing the receiver granted the receiver broad authority to do “such 

acts respecting the property as the court may authorize.” (Ibid.) The court had also

retained jurisdiction to allow any of the parties to apply for further orders or 

modifications of existing orders. Upon review, the Cal-American court determined the 

trial court had correctly concluded the receiver had the power to sell the property subject 

to confirmation, but decided the receiver had failed to present sufficient facts warranting 

exercise of the power to sell. (Id. at pp. 274, 276-277.) 

Turner and Cal-American exemplify the principle that a receiver’s powers are

determined by the scope of the appointment order if the receiver’s duties are not 

expressly proscribed by statute. Additionally, a trial court may grant a receiver authority 

beyond that prayed for in the original complaint. Cal-American illustrates that even a 

purported “rents and profits” receiver may still be authorized by the court to sell the 

property if they are able to demonstrate the need for a sale and are given court approval. 

(See Cal-American, supra, 138 Cal.App.3d at pp. 273-275.) 

Therefore, even if we were to accept as true Downtown Sunnyvale’s argument that 

Wells Fargo only prayed for a rents and profits receiver in its original complaint, the trial

court would not have erred in granting Hunt additional powers to manage and control the 

Project and its collateral.

d. Hunt’s Actions During the Receivership

Having determined the court’s appointment order and subsequent orders granted 

Hunt broad authority to manage and develop to the property, we now consider whether 

the court abused its discretion when it found Hunt acted within the scope of the court’s 

orders when he resolved mechanics’ liens and made improvements to the Project. 
28

Resolving Mechanics’ Liens

First, Downtown Sunnyvale claims the court erred in concluding Hunt acted 

properly, because he impermissibly resolved liens by using the Borrowers’ equity and 

advances that were not allowed under the deed of trust. Downtown Sunnyvale asserts 

that Hunt “only merged those [mechanics’] liens and [Wells Fargo’s] last-priority 

advances into one gigantic ‘Super Lien’–Borrower’s Equity.” Downtown Sunnyvale 

emphasizes “ ‘[t]he receiver does not occupy the status of an assignee. His function is 

that of a minister of the court in possession of the property, to the end of conserving the 

rights of everybody having any interest; and no lien or contract is disturbed or altered by 

the court’s intervention.’ ” (Wright v. Standard Engineering Corp. (1972) 28 Cal.App.3d 

244, 248.) 

Downtown Sunnyvale’s arguments are unsupported. Preliminarily, Downtown 

Sunnyvale has not articulated how any prior liens or contracts were disturbed or altered 

by Hunt’s activities. Furthermore, the appointment order specifically authorized Hunt to 

negotiate and resolve mechanics’ liens and allowed Hunt to record receiver’s certificates. 

The appointment order permitted Wells Fargo to make advances to the receiver, 

specifying these advances would be secured advances. There is nothing to suggest that 

Hunt did anything other than what he was expressly authorized to do under the deed of 

trust and the court’s orders. 

Developments and Improvements to the Project

Downtown Sunnyvale also argues Hunt’s development of the Project exceeded the 

authority granted to him under the appointment order. As Hunt contends in his 

respondent’s brief, Downtown Sunnyvale has not specifically articulated which of Hunt’s 

actions it believes constitute improper “development work.” To the extent Downtown 

Sunnyvale claims that the improvements made to the Project to fulfill the requirements of 
29

the Nokia lease was impermissible, the trial court specifically authorized Hunt to take all 

necessary steps to execute the Nokia lease. 

Moreover, we previously determined the appointment order granted the receiver 

broad authority to “take possession of, use, operate, manage and control the Collateral” as 

well as to “protect, preserve, maintain and improve the Collateral.” Therefore, there is no 

support for Downtown Sunnyvale’s claim that Hunt’s purported development work 

exceeded the authority granted to him under the court’s orders.

Nonetheless, Downtown Sunnyvale asserts that California law has consistently 

held that a beneficiary has no right to impose the cost of preforeclosure improvements on 

the borrowers or owners of a property. Therefore, Downtown Sunnyvale insists Hunt had 

no right to make improvements to the Project. In support of this position, Downtown 

Sunnyvale cites to Barry v. OC Residential Properties, LLC (2011) 194 Cal.App.4th 861. 

The court in Barry stated that “[a]s a general rule ‘the mortgagee may make such repairs 

as are reasonably necessary for the preservation of the property, but not permanent 

improvements, or things which conduced merely to his comfort or convenience. 

[Citations.]’ [Citation.] ‘ “. . . Unreasonable improvements may be of benefit to the 

estate; but, unless made with the consent and approbation of the mortgagor, no allowance 

can be made for them. The mortgagee has no right to impose them upon the owner, and 

thereby increase the burden of redeeming.” ’ ” (Id. at p. 871.) 

Barry is inapplicable, it did not concern a receivership--it involved a mortgagee’s 

right to construct improvements and burden the owner upon redemption. In contrast, 

here we are confronted with a situation where a court-appointed receiver manages and 

operates a property, making certain improvements based on the authority granted to him 

by the court itself. Downtown Sunnyvale’s contention that Barry is analogous lacks 

support, and it has failed to provide any legal authority for its position that a receiver

cannot improve or develop a subject property subject to a court’s approval.
30

Violation of Section 726

Downtown Sunnyvale argues that if the discharge order is affirmed, it must mean 

the appointment order authorized a violation of section 726 because the receiver’s liens 

depleted the Borrower’s equity and in essence was a form of “coercive relief to take the 

Borrowers’ assets--the equivalent of taking funds from a Borrowers’ bank account 

[citation] or creating a ‘banker’s lien’ [citation] before exhausting the security.” 

Section 726 dictates there can only be one action for the recovery of debt or 

enforcement of a right secured by a mortgage on a real property or estate. It “is both a 

‘security-first’ and ‘one-action’ rule: It compels the secured creditor, in a single action, 

to exhaust his security judicially before he may obtain a monetary ‘deficiency’ judgment 

against the debtor.” (O’Neil v. General Security Corp. (1992) 4 Cal.App.4th 587, 597.) 

A “debtor may raise section 726 as an affirmative defense or may invoke it later as a 

sanction against a creditor who forecloses without exhausting all of the security in a 

single action.” (Aplanalp v. Forte (1990) 225 Cal.App.3d 609, 613.) 

Preliminarily, we note that this does not appear to be the correct forum for 

Downtown Sunnyvale to air its grievances over the purported violation of section 726. 

Downtown Sunnyvale’s claim that Wells Fargo effectively appropriated assets through

Hunt by recording receiver liens prior to exhausting its security can be raised in a 

separate action against Wells Fargo (the secured creditor), or as an affirmative defense in 

an action brought by the bank.

15

Hunt was not a creditor; he was a receiver appointed to act as a neutral agent of 

the court. Wells Fargo, the secured creditor, is not a party to Downtown Sunnyvale’s 

 

15 Indeed, Downtown Sunnyvale filed a cross-complaint against Wells Fargo for 

violating section 726, which was stricken by the trial court under the anti-SLAPP statute 

(§ 425.16). As we previously discussed, this court affirmed the trial court’s order in an 

unpublished decision. (Downtown Sunnyvale Residential, LLC v. Wachovia Bank 

National Association (Oct. 17, 2013, H037419) [nonpub. opn.].) 
31

appeal over the discharge order. Downtown Sunnyvale has not articulated how its 

arguments regarding a violation of section 726 are appropriately raised in an appeal 

following a receiver’s discharge. 

Furthermore, we are unconvinced that interpreting the appointment order as 

granting Hunt authority to manage the Project and to make certain improvements would 

somehow amount to a violation of section 726. Shin v. Superior Court (1994) 26 

Cal.App.4th 542, which Downtown Sunnyvale relies on in its reply brief, is 

distinguishable. In Shin, a secured lender obtained a prejudgment attachment order 

against a property in Korea prior to commencing an action for judicial foreclosure. (Id. at 

p. 545.) The Shin court concluded this action violated the one action rule. (Id. at p. 549.) 

Unlike Shin, here there is no multiplicity of filed lawsuits or actions. Wells Fargo filed a 

complaint for judicial foreclosure, an action permitted under section 726. The bank also 

sought appointment of a receiver, which does not constitute an action within the meaning 

of section 726. (§ 564, subd. (d).) 

Moreover, there is nothing in the record to indicate Wells Fargo sought to 

appropriate noncollateral assets related to the Project in order to satisfy the outstanding 

debt. (§ 564, subd. (d).) There is also no support for Downtown Sunnyvale’s conclusion 

that Hunt’s development of the Project and recording of receiver’s liens--acts properly 

authorized by court order--were in effect a collection of security in violation of the 

security-first rule. In addition, Downtown Sunnyvale’s arguments center on the 

receiver’s actions, not on any actions taken by the bank, the secured creditor. There may 

be some situations where a receiver’s actions taken on behalf of a secured creditor may 

run afoul of section 726, but we are not presented with such a scenario here. (See In re 

500 Ygnacio Associates Ltd. (Bankr. N.D. Cal. 1992) 141 B.R. 191, 194-195 [receiver 

applied proceeds taken from rents and profits to pay an indebtedness owed to a secured 

lender].) 
32

In sum, we find no merit in Downtown Sunnyvale’s claims regarding section 726.

e. Conclusion

Given our foregoing analysis of Downtown Sunnyvale’s contentions, we conclude

the trial court properly interpreted the scope of the order appointing Hunt as the receiver 

when it discharged him from his duties.

4. Breach of Receiver’s Duties

Next, we turn to Downtown Sunnyvale’s contention that the trial court erred in 

discharging Hunt, because Hunt breached his duty to provide the parties with monthly 

reports and to act as a neutral agent of the court.

“A receiver is not immune from responsibility for his or her acts. A receiver 

cannot be held liable as a tortfeasor for an act done within the scope of the powers 

granted by the order of the court. [Citation.] Nevertheless, a receiver, as any fiduciary, 

may be surcharged and his or her surety held liable for a failure to properly carry out the 

duties imposed by the order of appointment.” (Shannon v. Superior Court (1990) 217 

Cal.App.3d 986, 993.)

As we previously noted, the decision to approve a receiver’s conduct and 

discharge him “ ‘rests upon the sound discretion of the appointing court to be judicially 

exercised in view of all the surrounding facts and circumstances and in the interest of 

fairness, justice and rights of the respective parties.’ ” (People v. Riverside University,

supra, 35 Cal.App.3d at p. 582.) A trial court should approve the receiver’s conduct if it 

is reasonable and undertaken in good faith. (Ibid.) “Our view of the facts must be in the 

light most favorable to the order and we must refrain from exercising our judgment 

retrospectively. Reversal is warranted only after concluding the trial court abused its 

discretion by confirming a fraudulent, unfair, or oppressive [act by the receiver].” (CalAmerican, supra, 138 Cal.App.3d at p. 274.)
33

a. Failure to File Monthly Reports

Downtown Sunnyvale maintains that Hunt breached his fiduciary duties when he 

failed to submit reports and documentation to Pau and SHP. 

Pursuant to California Rules of Court, a receiver must provide monthly reports to 

the parties, and if requested, to nonparty client lienholders. (Cal. Rules of Court, rule

3.1182(a).) The reports must include items such as a narrative report of events, a 

financial report, and a statement of all fees paid to the receiver, employees, and 

professionals. (Ibid.) Reports are not filed with the court unless the court orders 

otherwise. (Id., subd. (b).) 

Therefore, Hunt possessed the duty to provide the parties to the litigation monthly 

reports of his activities. Hunt admitted in his deposition he prepared monthly reports 

documenting the finances of the receivership but these reports were not submitted to the 

parties. However, he claimed during the course of the receivership he prepared and 

submitted nearly 3,000 pages worth of financial records to Wells Fargo and RREEF as 

representative of the Borrowers. Downtown Sunnyvale asserts the lack of monthly 

reporting deprived the parties of important financial information and had they been 

provided reports on a consistent basis they would have objected earlier to Hunt’s actions. 

We conclude the court did not abuse its discretion in discharging Hunt despite his 

failure to provide monthly reports based on its conclusion that Downtown Sunnyvale had 

not articulated how it was prejudiced by Hunt’s actions. The trial court determined Hunt 

acted within the scope of his granted authority during the course of the receivership. We 

reasoned this finding was not made in error, because the trial court’s appointment order 

and subsequent orders had granted Hunt broad authority to manage and operate the 

Project. Additionally, Hunt opined the Borrowers and Wells Fargo were apprised of his 

actions through the course of the receivership, because they were provided financial 
34

documents that explained the receiver’s activities.

16

 The receiver also sought court 

approval for many of his major acts, including execution of the Nokia lease, settlement of

claims with Target, and negotiation of changes to the ARDDOPA. All parties to the 

litigation were notified of these actions and no requests were made to the receiver for 

monthly reports. Based on the foregoing, it was not unreasonable for the trial court to 

conclude that even though Hunt did not provide monthly reports, the parties were not 

prejudiced. 

Furthermore, Downtown Sunnyvale’s claim that “Hunt concealed his required 

accountings . . . for as long as possible, defying eight . . . court orders for the records” is 

misleading. The discovery requests alluded to by Downtown Sunnyvale were not made 

while the receiver was actively managing the Project. These requests were made after

Hunt filed his final account and moved for discharge. 

b. Failure to Act as a Neutral Agent

Downtown Sunnyvale also insists that Hunt failed to act as a neutral agent of the 

court. Pursuant to California Rules of Court, rule 3.1179, a receiver is a neutral agent 

that must act for the benefit for all who have an interest in the receivership property. The 

party seeking the appointment of a receiver may not enter into any contract or 

understanding with the receiver concerning what capital expenditures will be made on the 

property. (Cal. Rules of Court, rule 3.1179(b)(4).)

Downtown Sunnyvale alleges Hunt improperly favored Wells Fargo’s interests, 

agreed to make capital expenditures as directed by Wells Fargo, used racial slurs against 

 

16 Downtown Sunnyvale has not provided support for its argument that Pau and 

SHP were also entitled to receive financial documents regarding the receivership. 

California Rules of Court, rule 3.1182(a) requires a receiver to provide reports to parties. 

Pau and SHP were not the Borrowers, but individual entities that comprise the 

Borrowers. Therefore, it is unclear whether Hunt’s obligation to provide monthly reports 

extends to providing monthly reports to SHP and Pau.
35

Pau, and altered his timesheets in order to conceal his bias. Downtown Sunnyvale claims 

this bias was widespread, with evidence of the harm it suffered replete in the record. In 

support, Downtown Sunnyvale points to a portion of Hunt’s deposition where he states he 

treated RREEF, Pau, and SHP differently from Wells Fargo. 

Downtown Sunnyvale takes this statement out of context. Reading the full text of 

the deposition, Hunt actually states that per the court’s order, he was independent and 

neutral, answering only to the court. However, Hunt reiterated he was aware that the 

lender was providing capital and had the discretion to fund his activities. Accordingly, 

Hunt insisted he felt it would have been irresponsible for him to independently make 

decisions “without having some understanding and concurrence of what the bank’s 

willingness was to fund certain activities” he felt were important to protect the collateral.

Hunt’s testimony that he “listened” to the bank in order to determine whether 

Wells Fargo would fund any of the receiver’s activities to protect the collateral is not 

evidence he colluded with Wells Fargo. Hunt stated he merely sought to gain an

understanding about what activities Wells Fargo would finance. There is nothing to 

indicate that Hunt took orders from Wells Fargo, or was otherwise biased in favor of 

Wells Fargo. Pursuant to the appointment order, Wells Fargo had the discretion to make 

advances to the receiver for expenses incurred in performing his duties. Hunt’s 

consultations with the bank to determine what actions would be funded can be reasonably 

perceived as a prudent act in performance of his duties as a receiver. Therefore, it was 

not unreasonable for the trial court to conclude Hunt did not breach his duty to remain 

neutral. 

5. Conclusion

We conclude the trial court properly interpreted the scope of the receivership 

orders and the receiver’s powers under its prior orders. Additionally, we find that 

Downtown Sunnyvale has failed to adequately demonstrate the court abused its discretion 
36

in discharging Hunt despite his alleged breaches of fiduciary duties. We therefore affirm 

the parts of the discharge order appealed from in case No. H038572.

II. Wells Fargo’s Appeal

Wells Fargo appeals from the trial court’s order discharging Hunt and the trial 

court’s order requiring Wells Fargo pay the receiver’s postdischarge fees. Wells Fargo 

claims the court improperly allocated all of the fees and costs to the bank solely on the 

basis that it was the entity that initially sought appointment of the receiver.

1. Appealability

First, we address the threshold issue of whether the orders are appealable. 

Downtown Sunnyvale contends Wells Fargo cannot appeal the $1 million advanced to 

Hunt in October 2011 because that amount was advanced pursuant to the appointment 

order, which was immediately appealable. Therefore, Downtown Sunnyvale maintains 

this amount was not “unpaid” when the court entered the discharge order and is not 

within the provision of the discharge order from which Wells Fargo has appealed. 

Wells Fargo insists Downtown Sunnyvale mischaracterizes the nature of the fees 

imposed, and we agree. Wells Fargo consented to make advances to the receiver 

pursuant to the appointment order. Therefore, there was approximately $1 million in the 

receivership estate before Hunt filed his final account. However, this $1 million was not 

paid to Hunt. The court still had discretion to approve the receiver’s fees and determine 

which party should be obligated to pay. In fact, the discharge order required any cash 

remaining in the receivership estate after payment of the receiver’s fees be returned to 

Wells Fargo. 

Downtown Sunnyvale also argues the interim funding order was appealable; 

therefore, Wells Fargo’s failure to appeal from the funding order means it is barred from 

pursuing its arguments regarding the predischarge fees. Typically, “ ‘under the one final 

judgment rule, interlocutory or interim orders are not appealable, but are only 
37

“reviewable on appeal” from the final judgment.’ ” (Barton v. Ahmanson Developments,

Inc. (1993) 17 Cal.App.4th 1358, 1360.) Under the collateral order exception, an interim 

order is appealable if “1. The order is collateral to the subject matter of the litigation, [¶] 

2. The order is final as to the collateral matter, and [¶] 3. The order directs the payment of 

money by the appellant or the performance of an act by or against the appellant.” (Marsh 

v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289, 297-298.) 

The interim funding order directed Wells Fargo to pay money. However, it is

clear from the hearing that the trial court did not intend the order to be final. During the 

hearing, the court remarked that it believed the issues being contested, including the 

receiver’s fees, would be adjudicated at the later discharge hearing. Therefore, no 

forfeiture has occurred.

2. Statutory Framework and Standard of Review

“A receiver is an agent and officer of the court, and is under the control and 

supervision of the court. (§ 568; Cal. Rules of Court, rule 3.1179.) The receiver is also a 

fiduciary who must act for the benefit of all parties interested in the property. [Citation.] 

[¶] Receivers are entitled to compensation for their own services and the services 

performed by their attorneys. [Citation.] Generally, the costs of a receivership are paid 

from the property in the receivership estate. [Citations.] However, courts may also 

impose the receiver costs on a party who sought the appointment of the receiver or ‘

“apportion them among the parties, depending upon circumstances.” ’ [Citation.] Courts 

are vested with broad discretion in determining who is to pay the expenses of a 

receivership, and the court’s determination must be upheld in the absence of a clear 

showing of an abuse of discretion.” (City of Chula Vista v. Gutierrez (2012) 207 

Cal.App.4th 681, 685-686 (City of Chula Vista).) “In considering the appropriate source 

for the compensation, a relevant factor is whether the party to be charged obtained a 

benefit from the receiver’s services.” (Id. at p. 686.)
38

“A ruling that constitutes an abuse of discretion has been described as one that is 

‘so irrational or arbitrary that no reasonable person could agree with it.’ [Citation.] But 

the court’s discretion is not unlimited . . . . Rather, it must be exercised within the 

confines of the applicable legal principles. [¶] ‘The discretion of a trial judge is not a 

whimsical, uncontrolled power, but a legal discretion, which is subject to the limitations 

of legal principles governing the subject of its action, and to reversal on appeal where no 

reasonable basis for the action is shown.’ [Citations.] ‘The scope of discretion always 

resides in the particular law being applied, i.e., in the “legal principles governing the 

subject of [the] action . . . .” Action that transgresses the confines of the applicable 

principles of law is outside the scope of discretion and we call such action an “abuse” of 

discretion. [Citation.] . . . [¶] The legal principles that govern the subject of discretionary 

action vary greatly with context. [Citation.] They are derived from the common law or 

statutes under which discretion is conferred.’ [Citation.] To determine if a court abused 

its discretion, we must thus consider ‘the legal principles and policies that should have 

guided the court’s actions.’ ” (Sargon Enterprises, Inc. v. University of Southern 

California (2012) 55 Cal.4th 747, 773.)

3. Predischarge Fees

Wells Fargo argues that the trial court abused its discretion when it ordered all of 

Hunt’s predischarge fees (the fees incurred after the sale of the property and before 

discharge of the receiver) be paid by the bank.17 Wells Fargo contends it is clear from the 

record that the trial court erroneously concluded it did not have the authority to apportion 

fees to other parties in the litigation. Wells Fargo insists the trial court mistakenly 

focused its attention on which party sought the receiver’s appointment and failed to 

 

17 Wells Fargo does not contest the allocation of receiver fees before the sale of the 

property and does not contest the amount of the fees. 
39

consider equitable circumstances that would have required other parties to share the 

burden of the receiver’s costs and fees.

The trial court only allowed Downtown Sunnyvale to submit a brief on the fee 

issue. Therefore, Wells Fargo insists “[Downtown Sunnyvale] used this opportunity to 

convince the court that (a) the party requesting the receiver is always responsible for the 

receiver’s fees and costs, and (b) the Appointment Order here also made Wells Fargo 

responsible for all the receivership fees and costs in any event.” 

Wells Fargo claims neither of these propositions is true, and we agree. “It [is] . . .

said that if the [receiver’s] fund be insufficient, [the receiver] may then look to the parties 

at whose instance he was appointed. It may also transpire that liability to pay the 

expenses and fees of a receivership rests upon any or all of the parties for whose benefit 

the receivership was created.” (Stanton v. Pratt (1941) 18 Cal.2d 599, 603.) 

Indeed, in Atlantic Trust Co. v. Chapman (1908) 208 U.S. 360, the Supreme Court 

concluded a lower court erred when it held the party who requested the receiver solely 

responsible for the receiver’s fees on the basis that the receivership estate was insufficient 

to cover the receiver’s expenses. (Id. at pp. 375-376.) However, in so doing the court did 

not foreclose the possibility that the party who requested appointment of the receiver may 

be responsible for the receiver’s fees. The court acknowledged that “cases may arise in 

which, because of their special circumstances, it is equitable to require the parties, at 

whose instance a receiver of the property was appointed, to meet the expenses of the 

receivership, when the fund in court is ascertained to be insufficient for that purpose.” 

(Id. at p. 375.) Therefore, determining which party requested appointment of the receiver 

is but one factor a court may consider when apportioning fees. It is not dispositive of the 

issue. 

Furthermore, we agree with Wells Fargo’s assertion that the appointment order did 

not mandate that Wells Fargo would be responsible for all fees and costs associated with 
40

the receivership. The appointment order stated Wells Fargo could make discretionary

advances to the receiver for expenses incurred in performing receivership duties. There 

is nothing in the appointment order requiring Wells Fargo to fund the receivership after 

the property was sold. 

Wells Fargo asserts the trial court mistakenly relied on Downtown Sunnyvale’s

argument that a receiver’s fees should be paid by the party who requested appointment of 

the receiver. Therefore, it insists the trial court failed to understand the scope of its 

discretion. (Fletcher v. Superior Court (2002) 100 Cal.App.4th 386, 392 [“ ‘ruling 

otherwise within the trial court’s power will nonetheless be set aside where it appears 

from the record that in issuing the ruling the court failed to exercise the discretion vested 

in it by law’ ”].)

If a trial court misunderstands the applicable law, its decision abuses its discretion. 

“For example, a court could be mistaken about the scope of its discretion and the mistake 

could be entirely ‘reasonable’--that is, it adopts a position about which reasonable judges 

could differ. But a reasoned decision based on the reasonable view of the scope of 

discretion is still an abuse of judicial discretion when it starts from a mistaken premise, 

even though nothing about the exercise of discretion is, in ordinary-language use of the 

phrase, ‘beyond the bounds of reason.’ ” (Horsford v. Board of Trustees of California 

State University (2005) 132 Cal.App.4th 359, 393.) 

However, “[o]n a silent record, the ‘trial court is presumed to have been aware of 

and followed the applicable law’ when exercising its discretion. [Citations.] The 

appellate court cannot presume error where the record does not establish on its face that 

the trial court misunderstood the scope of its discretion.” (In re Jacob J. (2005) 130 

Cal.App.4th 429, 437-438, disapproved of on another ground in In re Julian R. (2009) 47 

Cal.4th 487, 494.)
41

We conclude the record does not affirmatively demonstrate the trial court 

misunderstood its discretion to apportion costs between the parties. In the beginning of 

the hearing on the receiver’s interim funding, the court asserted it believed the party who 

requested the receiver should be required to pay the receiver’s fees, stating it thought “to 

the extent that there’s an order regarding payment to the receiver, it should be the 

obligation of the party that requested [the appointment of the receiver] in the first place 

up until the point of the discharge.” 

Taken alone, this statement may have supported Wells Fargo’s claim. However, it 

is notable that during the same hearing, the court acknowledged it understood Wells 

Fargo’s arguments that the court could charge any party to the litigation for the receiver’s 

fees. At the conclusion of the arguments pertaining to the receiver’s funding, the court 

stated its inclination was that the party who requested the receiver should bear the cost of 

the receivership. However, the court also noted that it believed “there is some argument 

to be made that the ongoing work will ultimately benefit the ongoing progress of the 

[P]roject,” and reiterated that it would like to give the fee issue “further thought” and 

would prefer to “reflect on” the parties’ arguments before issuing its order.

Furthermore, the language in the interim funding does not demonstrate the court 

misunderstood the scope of its discretion. The interim funding order states that 

“[a]lthough plaintiff [Wells Fargo] has prevailed on its special motion to strike, the 

receivership was established, in the first instance, at plaintiff’s request. Moreover, the 

continued necessity for the receivership was abrogated by plaintiff’s decision to proceed 

with non-judicial foreclosure rather than pursue its claim for judicial foreclosure.” This 

order expressly acknowledges the existence of equitable factors that may weigh against 

apportioning the fees to Wells Fargo and suggests the court nonetheless decided to 

exercise its discretion to impose the receiver’s fees on the bank. 
42

Finding that the court was aware of its discretion to apportion fees, we turn to 

Wells Fargo’s claim that the court’s decision was erroneous because the Borrowers’ 

conduct made the receivership necessary, and Downtown Sunnyvale’s meritless 

objections to the discharge necessitated the receiver’s postturnover, predischarge fees.

As discussed in City of Chula Vista, supra, 207 Cal.App.4th 681, a trial court may

require one or more parties to pay the receiver’s fees. A relevant factor to be considered 

is whether the party to be charged received a benefit from the receivership. (Id. at p.

686.) Wells Fargo cites to Luchs v. Ormsby (1959) 171 Cal.App.2d 377, where the court 

noted “the assessment imposed on the party whose conduct made the appointment of a 

receiver necessary is proper.” (Id. at p. 389.) Additionally, courts have concluded in 

certain cases that “ ‘the parties at whose instance [the receivers] were put upon the 

property should be required to provide the means of payment’ ” if the receivership estate 

is insufficient to compensate the receiver for fees and costs. (Ephraim v. Pacific Bank

(1900) 129 Cal. 589, 594.) 

We conclude the trial court did not abuse its discretion in ordering the bank pay all 

of Hunt’s fees. Certainly, Wells Fargo did not create the conditions that necessitated the 

receiver’s appointment, as it was the Borrowers who defaulted on the loan. However, 

Wells Fargo sought the receiver’s appointment and benefitted from the receiver’s 

services during the course of the receivership. In his capacity as a receiver, Hunt 

protected and weatherized the property, resolved mechanics’ liens, settled lawsuits, and 

executed the lease with Nokia. The collateral on Wells Fargo’s loan was protected from 

additional waste. Undoubtedly, there were equitable factors weighing in favor of 

charging Wells Fargo with the receiver’s fees and costs. 

Wells Fargo appears to find fault with the trial court’s decision because it failed to 

address the litigation tactics employed by Downtown Sunnyvale, which the bank 

characterizes as deceitful and wasteful. However, our review of a trial court’s orders is
43

fundamentally premised on the presumption that the order is correct, and error must be 

affirmatively shown. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) 

Furthermore, “[e]ach case of this kind must, of necessity, rest upon its own facts.” 

(Baldwin v. Baldwin (1947) 82 Cal.App.2d 851, 856.) It was therefore the responsibility 

of the trial court to ascertain, based on the circumstances of the case, whether equity 

would support imposing Hunt’s fees on other parties to the litigation. Courts are vested 

with broad discretion in determining who is to pay the expenses of a receivership, and the 

court’s determination must be upheld in the absence of a clear showing of an abuse of 

discretion. (City of Chula Vista, supra, 207 Cal.App.4th at pp. 685-686.) Since it does 

not appear the court relied on impermissible factors when considering who should bear 

the receiver’s costs, the decision was not unreasonable and was based on the applicable 

legal principles.

We decline to express an opinion on whether Downtown Sunnyvale’s actions 

caused the receiver’s fees to become excessive and whether we agree with Wells Fargo’s 

depiction of Downtown Sunnyvale’s litigation tactics. As we previously noted, some 

courts have acknowledged it can be fair to apportion receiver’s fees to parties whose 

actions necessitated the receivership. However, simply because we may not have found 

it unreasonable if the receiver’s fees had been apportioned differently does not mean the 

court abused its discretion under these particular facts. “We could . . . disagree with the 

trial court’s conclusion, but if the trial court’s conclusion was a reasonable exercise of its 

discretion, we are not free to substitute our discretion for that of the trial court.” (Avant! 

Corp. v. Superior Court (2000) 79 Cal.App.4th 876, 881-882.) 

4. Postdischarge Fees

Next, Wells Fargo challenges the trial court’s postdischarge order requiring it pay 

all of Hunt’s postdischarge fees. In contrast to its appeal over Hunt’s predischarge fees, 

Wells Fargo does not contend the court failed to understand the scope of its discretion. 
44

Instead, Wells Fargo argues the court abused its discretion because some of the fees 

should have been apportioned to Downtown Sunnyvale, because Hunt’s attorney fees 

were the direct result of the parties’ extensive litigation after the receiver’s discharge. 

The trial court’s order directing Wells Fargo pay Hunt’s postdischarge fees 

concluded that in its opinion, Wells Fargo was the primary beneficiary of the receivership 

estate. It also concluded that not all of the postdischarge fees were reasonable and 

reduced the fees by 20 percent. 

Wells Fargo contends this decision is patently unreasonable because Downtown 

Sunnyvale’s actions alone necessitated nearly all of Hunt’s postdischarge fees. Wells 

Fargo points to several items in Hunt’s postdischarge expenses that it argues “most 

clearly illustrate the unreasonableness of the trial court’s allocation” of fees. For 

example, Wells Fargo argues the fees and costs incurred by Hunt in responding to the

procedurally barred motion for reconsideration should not be allocated to Wells Fargo. 

Additionally, Wells Fargo insists the fees Hunt incurred responding to Downtown 

Sunnyvale’s accusations regarding Pau’s civil rights is equally as unreasonable, because 

the objections were overruled and Hunt was discharged from liability. 

Like our decision regarding the predischarge fees, we conclude Wells Fargo has 

not adequately demonstrated the court abused its discretion in ordering the bank pay 

Hunt’s postdischarge fees. As we discussed above, there were equitable factors weighing 

in favor of apportioning the fees to the bank, such as Wells Fargo’s derived benefit from 

the receiver’s actions and Wells Fargo’s role as the party who initially sought the

receiver’s appointment. 

Wells Fargo argues this analysis is flawed, because after the receiver’s discharge 

there was no receivership estate from which it could benefit. However, as we previously 

noted, “[i]n considering the appropriate source for the [receiver’s] compensation, a 

relevant factor is whether the party to be charged obtained a benefit from the receiver’s 
45

services.” (City of Chula Vista, supra, 207 Cal.App.4th at p. 686, italics added.) 

Undoubtedly, although Wells Fargo may not have directly benefited from the receiver’s 

postdischarge activities, Wells Fargo benefitted from the totality of the receiver’s services 

during the course of the receivership. 

Essentially, Wells Fargo urges us to reweigh the discretionary factors a trial court 

may consider when apportioning a receiver’s fees between the parties in a litigation. Its

argument is that the factors in favor of apportioning some of the costs to Downtown 

Sunnyvale ought to be balanced in such a way as to require the court to order Downtown 

Sunnyvale pay some of the fees. However, this argument stops short of demonstrating 

the trial court’s decision was a clear abuse of discretion “ ‘so irrational or arbitrary that 

no reasonable person could agree with it.’ ” (Sargon Enterprises, Inc. v. University of 

Southern California, supra, 55 Cal.4th at p. 773.)

Accordingly, we affirm the court’s postdischarge order.

DISPOSITION

The orders appealed from in case Nos. H038572 and H039024 are affirmed. 

In case No. H038572, L. Gerald Hunt is entitled to his costs on appeal. 

In case No. H039024, Downtown Sunnyvale is entitled to its costs on appeal. 
Premo, Acting P.J.

WE CONCUR:

Elia, J.

Márquez, J.