Court Opinion

ID: 9954272
Source: CourtListenerOpinion
Date Created: 2024-03-25 21:03:30.650497+00
Date Added: 2024-06-11T08:11:59.822528
License: Public Domain

Filed 3/25/24 Podell v. MAG Wellness CA1/2

              NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not
      been certified for publication or ordered published for purposes of rule 8.1115.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

                                  FIRST APPELLATE DISTRICT

                                               DIVISION TWO

       STEVEN PODELL,
       Plaintiff,
                                                                    A166329
       v.
       MAG WELLNESS, INC.,                                          (Alameda County
                                                                    Super. Ct. No.
       Defendant and Respondent,
                                                                    RG21110007)
       BAK FESTIVALS, INC.,
       Appellant.

      Appellant BAK Festivals, INC. dba Grupo Flor (Grupo) appeals from an
order denying its motion to vacate, a motion based on the claim that the
orders it sought to vacate were void, as they followed an ex parte proceeding
that did not meet the requirements of the California Rules of Court. We
conclude that the ex parte ruling was in violation of the law, and we reverse.
                                              BACKGROUND
      In November 2020, Grupo entered into a written management services
agreement with MAG Wellness (MAG) under which Grupo would manage
and administer MAG’s business, including operating its retail cannabis
dispensary in Oakland. The agreement expressly provided it would
terminate on May 24, 2021.

                                                            1
      Grupo had ceased operations of the dispensary as of May 20, 2021, and
on that day transported the cash remaining on the dispensary premises to
Grupo’s facility in Salinas (hereafter, for consistency with the briefing, the
disputed cash).
      On August 16, 2021, Steven Podell, a former employee, filed a
complaint against MAG alleging two causes of action, for breach of contract
and common counts, based on a failure to pay Podell wages. The complaint
also sought a receivership.
      On August 23, the case was assigned for all purposes to the Honorable
Delbert Gee.
      On October 6, Judge Gee entered an order appointing Kevin Singer as
receiver over MAG. The order was based on a stipulation between Podell and
MAG that recited the parties have agreed that the sale of MAG was in the
best interest of all parties. It is worth noting that the declaration of Singer
that was submitted to the court in support of the stipulation read at the top
as follows:

      “KEVIN SINGER

      “SUPERIOR COURT RECEIVER/REFEREE

      “RECEIVERSHIP SPECIALISTS

      “795 Folsom Street, 1st Floor

      “San Francisco, California 94107 [¶] . . . [¶]
      “E-mail: Kevin@RecveivershipSpecialists.com”
As will be seen, it appears that arguments Singer made to the court below
indicated that his experience, or the fact that this matter involves a
receivership, somehow deserved special treatment, and thus made various
rules inapplicable.

                                        2
      On October 14, Scott Yahraus, representing himself as “working” for
Singer, sent an email to Kendra Clark, general counsel of Grupo, demanding
that Grupo turn over the disputed cash. The basis for the demand asserted
that “[p]er the attached court order appointing the receiver, paragraph 19 on
page 7 of the PDF states ‘All banks and financial institutions or other
persons or entities that hold any accounts containing Collateral shall
turn over all such funds in any such accounts to the Receiver upon
presentation of copy of this Order, and shall provide copies of any
requested records regarding any such accounts to the Receiver.’ ”
      On October 25, Ms. Clark emailed her response, that Grupo owned the
funds, and would not turn them over.
      On November 9, Blake Alsbrook, an attorney for Singer, sent an email
advising that the receiver was filing an ex parte application requesting an
order to show cause why Grupo should not immediately turn over the
disputed cash. The email did not state a time or place for the hearing on the
application, but rather stated that “this Application will be heard on the
papers without a formal hearing. To the extent that you intend to oppose the
ex parte application, I am informed that briefs may be electronically filed.”
      That same day, November 9, Singer filed an ex parte application for
issuance of an order that sought various items, which application states on
its cover page that “no hearing required.” In pertinent part, the application
asserted it was “made on an ex parte basis because (1) counsel is immediately
necessary to address a multitude of compliance and other legal issues in this
matter . . . and (3) Grupo is holding cash that properly belongs under the
Court’s control. As the Court is aware, cash is easily transferrable and may
be secreted at any moment.”

                                       3
      We are unable to precisely determine what happened following
November 9. What is in the record is a November 22 order signed by Judge
Gee, which order begins as follows: “The Court having considered Receiver
Kevin Singer’s (“Receiver”) ex parte application for the issuance of an
order . . . .” We do not understand how Judge Gee’s order could be proper, not
in light of the California Rules of Court regarding ex parte proceedings,
especially the rules of notice.
      What the Rules contain, and how they must be applied, are thoroughly
described in the book providing guidance and instruction—and practical
tips—to trial judges, in the book published by The California Center for
Judicial Education and Research—California Judge’s Benchbook, Civil
Proceedings Before Trial (CJER 2022) (Benchbook). As the Benchbook
describes itself, it “focuses on the judge’s role,” provides “practical working
tools to enable a judge to conduct proceedings fairly, correctly, and efficiently.
[It is] written from the judge’s point of view, giving the judge concrete advice
on what to look for and how to respond.” (Benchbook, supra, Preface, p. v.)
      Part III of Chapter 6 of the Benchbook is entitled “Ex Parte
Applications.” And section 6.38 is entitled “Required Documents,” which, as
we read the record here, might not have been served on Grupo.1 But a more

      1 This is how the Benchbook puts it:

      “List of required documents. A request for ex parte relief must be in
writing and must include all of the following documents:
     “• An application that contains the case caption and states the relief
requested. (Cal. Rules of Court[, rule] 3.1201(1).)
      “• A declaration in support of the application that makes an
affirmative factual showing and contains competent testimony based on
personal knowledge of irreparable harm, immediate danger, or other
statutory basis for granting ex parte relief. (Cal. Rules of Court[,
rules] 3.1201(2), 3.1202(c).)

                                        4
fundamental problem—and the basis of Grupo’s position—is that the notice
required by the Rules was not given—an argument with which we agree.
      Section 6.39 of the Benchbook is entitled “Notice to Other Parties,” and
provides in pertinent part as follows:
      “Time of notice: in general. A party seeking an ex parte order must
notify all parties no later than 10:00 a.m. on the court day before the ex parte
appearance, absent a showing of exceptional circumstances justifying a
shorter time for notice. Cal[ifornia] Rules of C[our]t[, rule] 3.1203(a). See
Newsom v. Superior Court[, supra,] 51 Cal.App.5th [at pp.] 1098−1099 . . . ;
Datig v. Dove Books, Inc. (1999) 73 Cal.App.4th 964, 976 (voicemail message
from applicant’s attorney asking opposing attorney to call applicant’s
attorney was insufficient notice). See also Vesco v. Superior Court (2013)
221 Cal.App.4th 275, 280 (fact that California Rules of Court[,
rule] 1.100(c)(1) allows application for an accommodation by a person with a
disability to be made ex parte does not dispense with notice requirements of
California Rules of Court[, rule] 3.1203(a)). [¶] . . . [¶]

      “• A declaration based on personal knowledge of the notice given under
Cal[ifornia] Rules of C[our]t, rule 3.1204. (Cal. Rules of Court[, rule]
3.1201(3). See § 6.39.
      “• A memorandum. (Cal. Rules of Court[, rule] 3.1201(4). See § 6.3.)
     “• A proposed order. (Cal. Rules of Court[, rule] 3.1201(5); Newsom v.
Superior Court (2020) 51 Cal.App.5th 1093, 1098−1099. See § 6.7.)
      “Contents of application. An ex parte application must state the name,
address, email address, and telephone number of any attorney the applicant
knows is an attorney for any party or, if no such attorney is known, the name,
address, email address, and telephone number of the party if known to the
applicant. (Cal. Rules of Court[, rule] 3.1202(a).)”

                                         5
      “Contents of notice. The notice must state with specificity the relief
that will be requested and the date, time, and place for the presentation of
the ex parte application. (Cal. Rules of Court[, rule] 3.1204(a)(1).)
      “Opposing party’s appearance. The party seeking ex parte relief must
attempt to determine whether opposing party will appear to oppose the
application. (Cal. Rules of Court[, rule] 3.1204(a)(2).)
      “Declaration regarding notice. An ex parte application must be
accompanied by a declaration regarding notice that states:
      “• The notice that was given, including: (1) the date, time, manner,
and name of the party informed; (2) the relief sought; (3) any response;
(4) whether opposition is expected; and (5) that, within the applicable time,
the applicant informed the opposing party where and when the application
would be made (Cal. Rules of Court[, rule] 3.1204(b)(1));
      “• That the applicant in good faith attempted to inform the opposing
party, but was unable to do so, specifying the efforts made to inform the
opposing party (Cal. Rules of Court[, rule] 3.1204(b)(2)); or
      “• That, for reasons specified, the applicant should not be required to
inform the opposing party (Cal. Rules of Court[, rule] 3.1204(b)(3).)
      “While the goal of the ex parte procedure may be to provide expedited
relief, the procedures are designed to ensure the participation, if possible, of
the opposing party. Thus, the party seeking ex parte relief must properly
notify the opposing party from whom relief is sought. If the opposing party
has not been properly notified and does not appear at the hearing, the judge
may not grant the relief sought. (Newsom v. Superior Court, supra,
51 Cal.App.5th at [p.] 1099.)”
      There followed this practice tip in a bolded box:

                                        6
      “Judicial Practice: Many judges insist on receiving details about each
attempt at service, such as who took what action, where, at what time, and
why the attempt was unsuccessful.”

      The November 9 email does not measure up.
      Despite that the notice requirements were not met, on November 22,
Judge Gee issued his order entitled “Order Authorizing Receiver Kevin
Singer to Retain Counsel; Setting Receiver’s Bond Amount; and Order to
Show Cause Directing BAK Festivals, Inc. DBA Grupo Flor To Appear and
Show Cause Why It Should Not Immediately Turn Over Receivership Funds
To Receiver.” (OSC) The OSC also contained the following declaration
regarding jurisdiction: “This Order to Show Cause and the supporting
Application of the Receiver shall be served pursuant to California law on
Grupo on or before December 10, 2021, with mailing to Grupo via its agent
for service of process and it [sic] attorney being equivalent to personal
service, and with such service providing this Court with jurisdiction over
Grupo.”
      On December 28, Grupo filed its response to the OSC. The response
expressly stated that Grupo was making a special appearance solely to object
to the trial court’s exercise of jurisdiction, arguing the court lacked
jurisdiction to utilize its powers to order Grupo, a stranger to the receivership
action, to surrender to the receiver any property Grupo claimed to own.
      Singer filed a reply, included within which was this representation: “In
a separate email to Ms. Clark, on November 9, 2021, Receiver’s counsel sent
notice that the Receiver was filing the Application. See, Exhibit 8 to the
Application. The email did not state a time or place for the hearing on the
Application, rather it informed Ms. Clark that ‘this Application will be heard
on the papers without a formal hearing. To the extent that you intend to

                                        7
oppose the ex parte application, I am informed that briefs may be
electronically filed.’ See, Id.” Exhibit 8 referenced in the declaration was
Mr. Alsbrook’s email described above.
      On January 6, 2022, Judge Gee ordered the OSC hearing continued to
January 24. The order also provided as follows: “The Court will provide
notice to all parties and third party BAK Festivals, Inc. to appear by video.
[¶] Receiver ordered to give notice of this order to third party BAK Festivals,
Inc. [¶] Kevin Singer (Non-Party) must forthwith serve a copy of this order
on all counsel of record and self-represented parties, and file proof of service.
[¶] Clerk is directed to serve endorsed-filed copies of this order, with proof of
service, to counsel and self-represented parties of record by mail.”2
      On January 24, an order to show cause hearing was held via bluejeans
video conference. Grupo did not appear. At the conclusion of the hearing
Judge Gee took the matter under submission, and asked Singer’s counsel to
submit an order.
      Counsel did so, and on February 7, Judge Gee signed an order directing
Grupo to “turn over Receivership Funds to Receiver,” specifically (1) ordering
Grupo to turn over the disputed cash to the Receiver within seven days after
the entry of the order; (2) ordering that an “evidentiary hearing” be held on
March 21, 2022, “for a final determination of ownership of the [disputed]
cash”; and (3) providing that Grupo and the Receiver may simultaneously file
declarations and points and authorities establishing any asserted ownership
interest in the disputed cash no later than February 28, and that responsive

      2 There is no showing in the record that the notices and services

required by order were given.

                                        8
authorities or declarations must be simultaneously submitted by the Receiver
and Grupo no later than March 14.
      On February 9, Receiver’s counsel served Grupo with notice of entry of
the turn-over order.
      On February 17, Grupo filed and served an ex parte motion to stay the
turn-over order pending an anticipated petition for writ of prohibition
challenging it.
      On February 22, the Receiver filed an opposition to the Stay Motion
and a supporting declaration.
      On April 5, Judge Gee held an evidentiary hearing, in which Grupo did
not participate. That same day, he issued his order that, following several
recitals, concluded as follows: “Therefore, the Court orders and decrees that
the $68,000 taken by Grupo from the safe of Mag Wellness Inc. is the
property of Mag Wellness Inc., and shall be turned over to and held by
Receiver Kevin Singer, along with the other assets in the Mag Wellness Inc.
receivership estate, pending further order of this Court.”
      On June 22, 2022, Grupo filed a Motion to Vacate the February 7 and
April 5 orders, asserting they were void under Code of Civil Procedure section
473, subdivision (d). The motion was simple and straightforward, asserting
that the November 9 email “failed to comply with California Rules of Court,
rule 3.1204(a)(1) and (b)(1).” And, it added, “Corporate Counsel for Grupo
recognized that Receiver’s counsel failed to comply with California Rules of
Court[, rule] 3.1204(a)(1) and (b)(1) (requiring that notice of an ex parte
application state with specificity the date, time, and place for the
presentation of the application) in noticing the hearing on the Application.
Without knowledge of when or where the Application was to be heard, and
out of an abundance of caution not wishing to submit Grupo to the Court’s

                                        9
jurisdiction in this matter, Grupo declined to submit a brief opposing the
Order to Show Cause called for in the Application.”
      Singer filed opposition, which opposition did not even attempt to rebut
Grupo’s argument, containing no reference to any Rule of Court. Instead, the
opposition argued that: (1) Grupo failed to properly seek relief regarding the
court’s orders; the motion fails to comply with Code of Civil Procedure
section 1008; and (3) the Court’s turn over order and evidentiary hearing are
not void, arguing essentially that somehow receiverships were special, going
so far as to assert that “once again, Grupo misses the mark by failing to
understand that the present case is a receivership case.”3
      Grupo filed a reply brief pointing out the receiver’s failure to address
Grupo’s argument.
      The Motion to Vacate came on for hearing on August 10, and that same
day Judge Gee issued his order denying it.
      An order denying a motion to vacate a void order is appealable.
(Shisler v. Sanfer Sports Cars, Inc. (2008) 167 Cal.App.4th 1, 5; Carlson v.

      3 It may be that a receivership can be obtained on an ex parte basis.

But even then, it is subject to much scrutiny. Citing many cases, Witkin
describes it this way: “It has been pointed out that the remedy of
receivership is available only on a strong showing of necessity and lack of
other adequate remedy. [Citation.] An ex parte order is still more harsh and
should be issued only in an emergency that makes immediate action
imperative. Several cases have held the showing insufficient. (See A.G. Col
Co. v. Superior Court (1925) 196 Cal. 604, 613; McCall v. McCall Bros. Co.
(1933) 135 Cal.App. 558, 559; Rogers v. Smith (1946) 76 Cal.App.2d 16, 21;
Turner v. Superior Court (1977) 72 Cal.App.3d 804, 810, fn. 2.) . . .”
(6 Witkin, Cal. Proc. (6th ed. 2023) Provisional Remedies, § 501.)
      In any event, that is not the issue here, where the appointment of the
receiver was done by stipulation. The issue here involves subsequent activity
by the receiver affecting a stranger to the litigation.

                                       10
Eassa (1997) 54 Cal.App.4th 684, 691.) And on October 6, Grupo filed its
notice of appeal.
                                 DISCUSSION4
      In Newsom v. Superior Court, supra, 51 Cal.App.5th 1093, an off-cited
case involving the Governor, the Court of Appeal confirmed the care—and
caution—a trial court must use in ex parte proceedings. “Various court rules
govern ex parte proceedings, which are designed to afford relief on an
essentially emergency basis. ‘A court will not grant ex parte relief “in any
but the plainest and most certain of cases.” ’ (People ex rel. Allstate Ins. Co. v.
Suh (2019) 37 Cal.App.5th 253, 257.) Substantively, ‘[a]n applicant must
make an affirmative factual showing in a declaration containing competent
testimony based on personal knowledge of irreparable harm, immediate
danger, or any other statutory basis for granting relief ex parte.’ [Citations.]
‘A trial court should deny an ex parte application absent the requisite
showing.’ (People ex rel. Allstate Ins. Co., at p. 257.)” (Newsom, supra,
51 Cal.App.5th at p. 1097.)
      Those principles apply to the actual issuance of an ex parte order. But
even before one gets to that point, there are rules about the required notice,
rules that were not met here.
      Newsom is dispositive. There, pursuant to his emergency powers, the
Governor issued an executive order requiring all voters be provided vote-by-
mail ballots. Real parties in interest filed a complaint for declaratory and
injunctive relief in the superior court challenging the executive order, and
sought ex parte relief. But the notice, which was sent by email sent just a

      4 Singer did not file a respondent’s brief, and so we will “decide the

appeal on the record, the opening brief, and any oral argument by [Grupo].”
(Cal. Rules of Court, rule 8.220(a)(2).)

                                        11
few minutes before the 10:00 a.m. deadline, was not proper notice to
Governor because it was sent to attorneys at Department of Justice, who
promptly advised the real parties in interest that they were not authorized to
accept service on Governor’s behalf, and real parties in interest did not serve
the Governor until afternoon before hearing). The trial court nevertheless
granted the temporary restraining order and suspended the executive order
      The Court of Appeal issued a writ of mandate directing the superior
court to vacate its order and to enter a new and different order denying the ex
parte application for relief, concluding that there was no basis for the
superior court to grant real parties in interest relief using ex parte
procedures prescribed by California law, as the hearing on the ex parte
application was held without proper notice to the Governor for his
appearance.
      We end with this observation by our Supreme Court made over 100
years ago, in Consolidated Const. Co. v. Pacific Elec. Ry. Co. (1920) 184 Cal.
244, 246, where an order of dismissal was made on an ex parte application by
a judge acting under mistake of fact: “[T]he case is a good illustration of the
complications and difficulties, with their incidents of delay, expense,
tribulation, and not infrequently injustice, which are fairly certain to ensue
upon the courts tolerating the practice of obtaining ex parte orders in any but
the plainest and most certain of cases.” To that we say “Amen.”
                                DISPOSITION
      The order denying the motion to vacate is reversed, and the matter is
remanded to the trial court to enter a new order granting the motion to
vacate. Grupo shall recover its costs on appeal from the receiver.

                                       12
                                     _________________________
                                     Richman, J.

We concur:

_________________________
Stewart, P.J.

_________________________
Mayfield, J. *

Podell v. MAG Wellness, Inc. (A166329)

       *Superior Court of Mendocino County, Judge Cindee Mayfield,
sitting as assigned by the Chief Justice pursuant to article VI, section 6
of the California Constitution.

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