City of Riverside v. Horspool

• Decision Date: 16 January 2014
• Docket Number: E051500,E053605
• Citation: 223 Cal.App.4th 670,167 Cal.Rptr.3d 440
• Court: California Court of Appeals Court of Appeals
• Parties: The CITY OF RIVERSIDE, Plaintiff and Respondent, v. William HORSPOOL, Defendant and Appellant. The City of Riverside, Plaintiff and Respondent, v. William F. Horspool et al., Defendants and Appellants; Kevin Randolph as Receiver etc., Movant and Respondent.

223 Cal.App.4th 670

167 Cal.Rptr.3d 440

The CITY OF RIVERSIDE, Plaintiff and Respondent,

v.William HORSPOOL, Defendant and Appellant.

The City of Riverside, Plaintiff and Respondent,

v.William F. Horspool et al., Defendants and Appellants;

Kevin Randolph as Receiver etc., Movant and Respondent.

E051500

E053605

Court of Appeal,

Fourth District, Division 2, California.

Filed January 16, 2014

See 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 33 et seq.

APPEAL from the Superior Court of Riverside County. Gloria Trask and Richard J. Oberholzer, Judges.¹ Affirmed. (Super. Ct. No. RIC10011477)

Robinson–Legal and Raymond G. Robinson for Defendants and Appellants.

Gregory P. Priamos, City Attorney, and Brandon S. Mercer, Deputy City Attorney, for Plaintiff and Respondent.

Gresham Savage Nolan & Tilden, Nicholas Firetag and Marlene Allen–Hammerarlund, Riverside, for Movant and Respondent.

RAMIREZ, P.J.

The City of Riverside (City) filed a nuisance abatement action as to property owned by William and Kelly Horspool, and sought the appointment of a receiver pursuant to Health and Safety Code section 17980 et seq.Defendant William Horspool (William) ² appealed from the order appointing the receiver in case No. E051500,³ but failed to obtain an undertaking on appeal. Kevin Randolph, in his capacity of receiver, obtained an order permitting the sale of the property to a party who rehabilitated the property after defendants frustrated his efforts to do so. A notice of appeal on behalf of both Horspools was filed in case No. E053605, from the order permitting the sale of the property and an order awarding the receiver extraordinary costs and fees. J.P. Morgan Chase Bank, the holder of the mortgage on the property, did not appeal.

On appeal, William raises 12 issues challenging the adequacy of the prelitigation notice of the proposed receivership, the appointment of the receiver, the propriety of the order for posting bond to challenge the appointment of the receiver, the entry of the defaults of both Horspools, the orders precluding them from opposing the receiver's ex parte application to sell and the order permitting the sale of the property, error in allowing the receiver to sell the property for less than its fair market value, error in precluding them from opposing the loan stripping effect of the sale of the property, error in awarding the receiver $114,000 in fees and costs, and error in allowing the receiver to conduct a private sale of the property. We affirm.

BACKGROUND ⁴

On December 10, 2008, the City of Riverside received a complaint regarding a vacant house on Mt. Vernon Avenue. A code enforcement officer conducted an aerial inspection of the property and observed a dilapidated roof. The following day, the officer inspected the property from a public right of way and observed the landscape and house were in a condition of dilapidation and disrepair ranging from landscape maintenance issues, including structural maintenance issues, and fire hazards caused by overgrown and dried weeds, as well as accumulated dead leaves. The officer posted a notice of violation instructing defendants William and Kelly Horspool to remediate specified issues before December 30, 2008.

On December 30, 2008, the code enforcement officer reinspected the property and observed no changes or improvements. On January 8, 2009, an administrative civil penalties notice and order (ACPNO) was issued for violations of sections 6.14.020(b), 6.14.030, 6.15.020(b), (c), and 6.11.040 of the Riverside Municipal Code. Notice of the ACPNO was sent by mail to the property owners and interested parties on January 8, 2009.⁵ William Horspool was personally served with the ACPNO on January 10, 2009. On February 18, 2009, the officer reinspected the property and observed the violations had not been corrected.

On March 5, 2009, a notice of the administrative civil penalties hearing was sent to the property owners and interested parties, seeking an order assessing administrative costs incurred. The notice was served by certified mail to William and Kelly Horspool, as well as the banks having a security interest in the property. An attorney for defendants William and Kelly Horspool appeared at the hearing for defendants. After the hearing, an administrative order was issued assessing daily civil penalties against the defendants.

On June 11, 2009, the Horspools filed for chapter 13 bankruptcy (it was converted to a chapter 7 bankruptcy on 6–29–09, case No. 6:09–bk–22815–PC) and obtained a stay, preventing the City from moving forward with the receivership. On April 1 and September 29, 2009, the code enforcement officer reinspected the property once per month, but no changes or improvements were observed.

On October 2, 2009, another notice of hearing was served by certified mail on defendants regarding a new ACPNO. On November 6, 2009, an administrative hearing order was issued assessing daily civil penalties in the amount of $500 a day. Additionally, the property was determined to be a public nuisance.

On April 20, 2010, the City obtained relief from the automatic stay in bankruptcy. On June 9, 2010, the City filed a complaint for nuisance abatement and an injunction, and a petition for appointment of a receiver, pursuant to Health and Safety Code section 17980.7. Proofs of service show the complaint was personally served on William. After three successive attempts to serve Kelly Horspool (Kelly) on different dates, substitute service was effected by leaving the summons and complaint with William, followed by mailing a copy of the summons and complaint to Kelly at her address.

On July 30, 2010, a hearing on the City's motion to appoint a receiver was held. William personally appeared at the hearing (in pro. per.) to request additional time to respond to the complaint. He represented to the court that he was in the process of refurbishing the property, although the City provided photographs taken the day before the hearing, which showed no improvements had been undertaken. The court agreed to postpone the hearing until August 2, 2010, on the condition William provide pictures showing significant improvement.

On August 2, 2010, the court held a hearing on the City's motion for appointment of a receiver. William appeared with counsel and made a general appearance. William's counsel informed the court William could not do anything to the property due to the fact he had filed for bankruptcy. The City demonstrated it had obtained an order exempting these proceedings from the automatic stay by the bankruptcy court. The court granted the City's motion and appointed Kevin Randolph as receiver.

On August 3, 2010, a notice of appeal was filed by William Horspool. On August 6, 2010, William filed an ex parte motion for an order fixing the amount of the appeal bond or dispensing with the bond pending appeal. On August 13, 2010, the court ordered an appeal bond in the amount of $80,000 to be posted within 10 days. No bond or undertaking on appeal was posted.

On the same day William filed his first appeal, he also filed a notice of related case, Horspool et al. v. City of Riverside. Another action, apparently seeking an injunction against the City to prevent it from proceeding with the receivership, was also filed in superior court under case No. INC080588. The trial court in the injunction action recognized that the action was in response to the appointment of the receiver in the instant action by another judge and refused to grant a temporary restraining order on August 24, 2010, informing William that the pending appeal was the appropriate remedy.

On August 20, 2010, the receiver submitted his initial inventory of property and initial report. The report indicated that William had refused to allow access to the property, under the belief that the appeal automatically stayed the receivership. Although William had represented he lived on the property, there was no evidence of human occupancy: the kitchen was gutted, asbestos debris was piled on the floor, there was mold on the walls of the den/patio, exposed wiring, no functioning bathroom due to lack of toilets, sinks or bathtubs, and there were no beds in the bedrooms.

On August 23, 2010, the clerk entered the defaults of both William and Kelly Horspool. On August 28, 2010, the Horspools filed a second chapter 13 bankruptcy petition (case No. 6:10–bk–37614–MJ), obtaining a stay of all proceedings. On September 17, 2010, the bankruptcy court granted relief to the City, and issued an order declaring the automatic stay is not in effect as to the City's nuisance actions “pursuant to 11 U.S.C. § 362(b)(4).” Because the motion for relief did not specifically address the receiver's authority to proceed with the receivership, the City sought a more specific order (its third application for relief) from the bankruptcy court, which granted the relief on October 8, 2010, and made the relief binding on any future bankruptcy.

On October 18, 2010, a motion to set aside default was filed as to both Horspools along with a motion to quash the complaint as to Kelly. The motion was not immediately heard because on November 19, 2010, defendants filed an ex parte application in the bankruptcy court to reopen their chapter 7 bankruptcy in case No. 6:09–bk–22815–CB, requiring the City to file a fourth motion for relief from the automatic stay on December 16, 2010. On December 22, 2010, the bankruptcy court issued an order confirming that the City's action to enforce code violations was exempt from the automatic stay.

On January 7, 2011, the receiver filed an ex parte application for an order approving the receiver's proposed rehabilitation plan, outlining the steps to be taken to bring the property up to code. On January 14, 2011, the Horspools filed a notice of removal of the receivership action to the bankruptcy court, but the bankruptcy court remanded the matter to the superior court on March 3, 2011, because the matter was not...