East West Bank vs HERBL Inc
East West Bank vs HERBL Inc
Case Number
23CV02629
Case Type
Hearing Date / Time
Mon, 10/20/2025 - 10:00
Nature of Proceedings
CMC; Motion re Adjudication of Claim filed by IRS; Motion: Order Authorizing Release of Funds
Tentative Ruling
East West Bank v. HERBL, Inc., et al.
Case No. 23CV02629
Hearing Date: October 20, 2025
HEARING: (1) Receiver Kevin Singer’s Motion For Adjudication Of Claim Filed By Internal Revenue Service And Objection To Proof Of Claim
(2) Receiver Kevin Singer’s Motion For Issuance Of Order Authorizing Receiver To Distribute Additional Funds To East West Bank
ATTORNEYS: For Plaintiff East West Bank: Marshall J. Hogan, Andrew B. Still, Bryce A. Suzuki, Snell & Wilmer L.L.P.
For Defendant HERBL, Inc., and Receiver Kevin Singer: Blake C. Alsbrook, Chase A. Stone, Ervin Cohen & Jessup LLP
For Claimant Central Coast Agriculture, Inc.: Christopher D. Nissen, Adam E. Wayne, Sonia T. Amodeo, Wilson, Elser, Moskowitz, Edelman & Dicker LLP
For The United States of America: Bilal A. Essayli, David M. Harris, Jolene Tanner, Gavin L. Greene, Office of the United States Attorney
TENTATIVE RULING:
The motions of receiver Kevin Singer objecting to and requesting an adjudication of the claim filed by the Internal Revenue Service, and for an order authorizing a distribution of additional funds to East West Bank, which were filed by the receiver on, respectively, April 18 and August 6, 2025, are each ordered off-calendar. The receiver and any interested party shall appear for a case management and status conference on January 26, 2026, at 10 a.m. in this Department. On or before January 1, 2026, the receiver and any interested party shall file and serve individual or joint status reports addressing the matters further discussed herein.
Background:
On June 20, 2023, plaintiff East West Bank (EWB) filed its complaint in this action asserting causes of action for: (1) breach of contract; (2) appointment of receiver; and (3) injunction in aid of receiver. The complaint alleges a loan to defendant HERBL, Inc., (HERBL) documented by a promissory note and secured by all or substantially all of HERBL’s personal property. (Complaint, ¶¶ 5-11.)
On June 26, 2023, EWB filed a stipulation of the parties for the appointment of a receiver and issuance of a preliminary injunction. On June 28, at the hearing of the ex parte application of EWB on the stipulation, the court entered its order appointing the receiver and issuing the preliminary injunction.
On July 10, 2023, the court confirmed the appointment of Kevin Singer as receiver (Receiver). The written order of the court was entered on July 17.
On April 18, 2025, the Receiver filed a motion (the April 18 Motion) objecting to, and requesting an adjudication of, a Proof of Claim for Internal Revenue Taxes (the IRS Claim) filed by the Department of the Treasury/Internal Revenue Service (the IRS), asserting a claim for unpaid taxes purportedly due from HERBL in the amount of $9,053,181.15. (Receiver Decl., 6 & Exh. E.) As grounds for the motion, the Receiver disputes the legal basis for the asserted tax liability, asserts that HERBL is entitled to a tax refund, and contends that the IRS Claim may be adjudicated in this proceeding pursuant to Internal Revenue Code section 6871.
The April 18 Motion was set for a hearing on July 28, 2025.
On May 27, 2025, the United States of America filed a notice of the removal of this action to the United States District Court for the Central District of California pursuant to section 1446 of title 28 of the United States Code.
On July 28, 2025, the court continued the hearing on the April 18 Motion to September 8.
On August 6, 2025, the Receiver filed an unopposed motion for an order (the August 6 Motion) authorizing the Receiver to distribute the amount of $1,391,932.20 to EWB, which was set for hearing on September 8.
On September 8, 2025, after a hearing, the court entered a minute order (the Order) adopting its tentative ruling as follows:
“The filing of a notice of removal of a civil action “shall effect the removal and the State court shall proceed no further unless and until the case is remanded.” (28 U.S.C.A. § 1446(d).) Once a notice of removal is filed, “[t]he state court ‘los[es] all jurisdiction over the case, and, being without jurisdiction, its subsequent proceedings and judgment [are] not ... simply erroneous, but absolutely void.’ [Citation.]” (Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano (2020) 589 U.S. 57, 63-64 [140 S.Ct. 696, 206 L.Ed.2d 1].) Further, “the state court may resume its first-instance jurisdiction if—but only if—there is a ‘remand’ of the action to it from the federal court. [Citation.]” (Allstate Ins. Co. v. Superior Court (1982) 132 Cal.App.3d 670, 675, fn. 6; 28 U.S.C.A. § 1447(c).)
Considering that the United States of America has filed a notice of removal to the United States District Court for the Central District of California, and given written notice of that filing (28 U.S.C.A. § 1446(b) & (d)), it appears under the general rules discussed above that the court is without jurisdiction as to all matters and proceedings in this action, including with respect to the IRS Claim, the April 18 Motion, and the August 6 Motion. There is also no information in the present record to indicate whether any requested distribution or payment of assets, including the distribution at issue in the August 6 Motion, may implicate or impact the IRS Claim.
For all reasons discussed above, the court will continue the hearing on the April 18 Motion and the August 6 Motion to permit the Receiver, and any interested party, to file and serve supplemental briefs explaining, with reasoned legal and factual argument, whether and to what extent the court has jurisdiction to proceed in this action, including as to the IRS Claim, the April 18 Motion, and the August 6 Motion, in light of the filing of the notice of removal as further discussed above, and absent a remand from the federal court.”
Pursuant to the Order, the court continued the hearing on the April 18 Motion and the August 6 Motion to October 20, 2025, and ordered the Receiver and any interested party to, on or before September 29, file and serve supplemental briefs addressing, with reasoned argument, the matters further discussed in the Order as set forth above.
The court’s records reflect that neither the Receiver nor any interested party has filed a supplemental brief addressing the matters discussed in the Order.
Analysis:
In the Order set forth above, the court explained the basis for its understanding that, under the general rule discussed in the Order, the court is without jurisdiction to proceed in this case, including with respect to the IRS Claim, the April 18 Motion, and the August 6 Motion. Pursuant to the Order, the court requested further briefing from the Receiver and any interested party explaining, with reasoned argument and supporting authority, why the court has jurisdiction to proceed notwithstanding the general rule discussed in the Order and above.
Considering that no supplemental briefing or supporting authority has been submitted by the Receiver or any interested party addressing the matters further described in the Order, the court concludes that the general rule set forth in the Order applies to this case, and that the court is without jurisdiction to proceed. (Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano (2020) 589 U.S. 57, 63-64 [140 S.Ct. 696, 206 L.Ed.2d 1].)
For all reasons discussed above, the court will order the April 18 Motion and the August 6 Motion off-calendar, subject to being reset for hearing upon the return of jurisdiction to this court. Further, the court will order the parties to appear at a case management and status conference to be set in the future, and will require the Receiver and any interested party to, not later than 10 days prior to that conference, file and serve status reports regarding the removal of this case, including the status of any remand of the action.