Opinion ID: 2630997
Heading Depth: 3
Heading Rank: 2

Heading: The Powers of Court-Appointed Receivers

Text: Because it is not practical for the court to do the physical work in connection with taking the possession [of] and preserving the property, the court appoints its officer or receiver to act. 2 Ralph Ewing Clark, A Treatise on the Law and Practice of Receivers § 384, at 645 (3d ed.1959); see also 4 Richard R. Powell, Powell on Real Property § 37.26[3][b], at 37-174 (2006) (A court may exercise its equity jurisdiction in appointing a receiver if there is danger that the property will be insufficient security for the debt or if waste is occurring on the property, or if the property is depreciating in value[.] (Footnotes omitted.)). The United States Supreme Court has defined a receiver as an indifferent person between parties, appointed by the court to receive the rents, issues, or profits of land, or other thing in question in th[e] court, pending the suit, where it does not seem reasonable to the court that either party should do it. [She] is an officer of the court; [her] appointment is provisional. [She] is appointed [o]n behalf of all parties, and not of the complainant or of the defendant only. [She] is appointed for the benefit of all parties who may establish rights in the cause. The money in [her] hands is in custodia legis for whoever can make out a title to it. It is the court itself which has the care of the property in dispute. The receiver is but the creature of the court; [she] has no powers except such as are conferred upon [her] by the order of [her] appointment and the course and practice of the court [.] Booth v. Clark, 58 U.S. 322, 331, 17 How. 322, 15 L.Ed. 164 (1854) (citations omitted) (emphases added); Unna v. Brown, 7 Haw. 190, 191 (1887) (The power given to the receiver is limited to the terms expressed in the order.). Stated differently, the receiver, as an officer of the court, derives her authority wholly from the orders of the appointing court. In the instant case, the circuit court's order appointing Receiver Park [hereinafter, the appointment order]  drafted by Hawaii Ventures and issued by the circuit court on August 24, 2000  specifically provided in relevant part: 3. POWERS AND DUTIES OF RECEIVER The Receiver shall have all the powers and duties provided by this [o]rder and any further [o]rders of th[e] [circuit c]ourt and shall have the authority to take such other actions as is reasonable to effectuate these powers and duties. Specifically: a. The Receiver shall use the Receiver's best efforts to manage, protect, care for, preserve, and maintain the Estate Property, [11] including, in the Receiver's discretion, ceasing business operations. . . . . f. The Receiver shall maintain control and possession of funds in all accounts and deposit accounts related to the Estate Property. Such funds are Estate Property, and may be used, as limited by this [o]rder, to pay for such expenses as are necessary or appropriate for the care, preservation and maintenance of the Estate, including ceasing business operations. The Receiver may open new bank accounts if the Receiver deems it appropriate to do so. g. To the extent funds are available, and with a priority to be determined in the Receiver's sole discretion, the Receiver shall pay any expenses (including for example, rent, utilities, taxes, payroll and debts to vendors) which arise during the period of the [r]eceivership and which are necessary or appropriate for the care, preservation and maintenance of the Estate. In connection herewith, the Receiver is authorized to enter into contracts, to elect to engage or not to engage for [the] Receiver's account any or all of the current employees, to employ and discharge employees, property managers and accountants, to terminate, negotiate, execute and deliver leases for space, to purchase materials, supplies and services, and to enter into loans with the consent of [the] Lender. . . . . . . . i. [Amended by the circuit court on April 30, 2001.] The Receiver shall accept from Otaka the amount of $550,000 plus interest . . . in satisfaction of the duty of [the Otaka Defendants] to account to the Receiver from sums paid to Otaka's affiliates from December 4, 1994 to the date of appointment of the Receiver, which duty was the original subject of this paragraph 3(i), and in satisfaction of the receivables shown on the balance sheets of the Hotel and HWB as of May 31, 2000 as due from Otaka and due from [the] Kona Surf [Resort Hotel. [12] ] Notwithstanding the preceding sentence, the Receiver shall retain any rights she may have to recover assets which are part of the Estate . . . and are subject to the pending foreclosure of the Kona Surf Resort Hotel in which she has granted the right to intervene, which rights, if any, shall be satisfied solely from said assets in said foreclosure. But for the prosecution of such intervention and recovery of assets, no further actions by the Receiver shall be required or undertaken to recover the sums paid to Otaka's affiliates pursuant to the original paragraph 3(i) of this [o]rder. . . . . k. The Receiver may, to the extent funds are available from the [Estate] or are made available by [the] Lender, undertake to expend revenues for maintenance or enhancement of the ability of the [m]ortgaged [p]roperty to operate, including marketing and refurbishing expenditures. . . . . m. The Receiver may grant access for inspection of the [m]ortgaged [p]roperty or books or records relating thereto to any party with such right. n. The Receiver is authorized and instructed to inform truthfully employees, vendors, tour agents and other interested parties of the status of the [Estate] and the receivership. o. [The] Receiver may assume and perform under any contract relating to the [Estate] or may refrain from assuming or performing under any contract. . . . . t. The Receiver may employ counsel, accountants and other professionals with respect to the Receiver's powers, duties and authority herein. u. The Receiver may institute, prosecute and defend, compromise, adjust, intervene in or become a party to such actions or proceedings in state or federal court as the Receiver may in the Receiver's reasonable judgment deem necessary or proper for the management, protection, care, maintenance or preservation of the Estate or the carrying out of the Receiver's duties under the terms of this [o]rder, including summary possession actions instituted against tenants of the Improvements and Real Property. . . . . 4. COMPENSATION OF RECEIVER The fees and costs of the Receiver and the Receiver's attorneys, accountants and other professionals, if any, shall be submitted to the [c]ourt for its approval, in the form of either a request(s) for fees upon which a hearing is held and/or a stipulation(s) among all parties. Such fees and costs shall be deemed to be secured by a superpriority lien against the Estate. . . . . 8. RECEIVER'S NON-LIABILITY The Receiver is an officer of the [c]ourt and, as such, [the] Receiver shall not be liable, in [the] Receiver's individual capacity, for any claims or demands for loss or damage, arising out of or in connection with this lawsuit and [o]rder, including any acts or omissions in connection with the management and operation of the property of the Estate, whether such claims or demands arise during the pendency of or after the completion of this lawsuit, except in the event that [the] Receiver's acts or omissions constitute bad faith or fraud. (Capitalization in original.) (Emphases added.) Bearing the foregoing principles in mind, including the discretionary powers of the circuit court presiding over the receivership, as well as the authority conferred upon Receiver Park as set forth in the appointment order, we turn first to the contentions advanced by Hawaii Ventures relating to Receiver Park's final report. Second, we examine those contentions made by Hawaii Ventures and the Otaka Defendants relating to the Special Master's report. Finally, we address: (1) Hawaii Ventures' remaining contentions; (2) ILWU's cross-appeal; and (3) the Former Employees' cross-appeal.