TSB Ag Inc vs Andersen & Sons Shelling Inc

Case Number

24CV05491

Case Type

Hearing Date / Time

Fri, 06/06/2025 - 10:00

Nature of Proceedings

Motion to Intervene; Motion Judgment on the Pleadings

Tentative Ruling

(1) For all reasons set forth herein, the motion of receiver David Stapleton to intervene and vacate arbitration award is granted. The receiver, David Stapleton, is granted leave to intervene in this action. The receiver shall serve a copy of the court’s ruling herein in accordance with Code of Civil Procedure section 387. Further, the “Reasoned Decision And Final Award” signed on September 20, 2024, in American Arbitration Association case no. 01-23-0003-7505 entitled TSB AG Inc. v. Andersen & Sons Shelling, Inc., a copy of which is attached as attachment 2 to the petition filed in this proceeding on October 3, 2024, is vacated.

(2) For all reasons set forth herein, the motion of petitioner TSB AG Inc., for judgment on the pleadings is denied.

Background:

On October 3, 2024, petitioner TSB AG Inc. (TSB) filed in this action a verified petition (the petition) against respondent Andersen & Sons Shelling, Inc., (Andersen), seeking an order confirming a “Reasoned Decision And Final Award” (the Award) entered in American Arbitration Association (AAA) case no. 01-23-0003-7505, entitled TSB AG Inc. v. Andersen & Sons Shelling, Inc. (the Arbitration Proceeding), and entering judgment in conformity with the Award. (Pet., ¶¶ 6-8 & Attachment 2 [Award].) As alleged in the petition:

On June 16, 2022, TSB and Andersen entered into an “Almond Pool Purchase Contract” which contains an arbitration provision. (Pet., ¶ 2 & Attachment 1.) TSB filed a demand with the AAA on August 24, 2023, which commenced the Arbitration Proceeding. (Pet., ¶ 3.) Andersen filed crossclaims in the Arbitration Proceeding. (Pet., ¶¶ 3-4.)

The Arbitration Proceeding was held on September 13, 2024, before arbitrator and retired judge Frank J. Ochoa (the Arbitrator). (Pet., ¶¶ 5.) The Arbitrator served the Award on September 20, 2024, in which TSB was awarded damages against Andersen in the total amount of $17,418,706.77, as of September 16, 2024. (Pet., ¶ 6 & Attachment 2 [Award].)

On October 17, 2024, David Stapleton, in his capacity as receiver for the assets of Andersen (the Receiver or, at times, Stapleton), filed in this action a “Notice Of Appearance, Notice Of Receivership Order, And Demand For Service Of Papers” (the Receiver Notice). Attached to the Receiver Notice as exhibit A is an “Order Appointing Receiver And Issuing Preliminary Injunction” (the Receivership Order), which was entered on August 8, 2024, in Superior Court of Tehama County case number 24-CI-000197 (the Receivership or Receivership Action). Further, the Receiver requests that notice and copies of all papers filed in this action be given to and served on his counsel, who is identified in the Receiver Notice. (Receiver Notice at p. 2.)

Concurrently with the Receiver Notice, the Receiver filed a verified response to the petition, admitting, denying, or otherwise responding to its allegations.

On December 31, 2024, the default of Andersen was entered as requested by TSB.

The Receiver’s motion to intervene in this action and to vacate the Award:

On October 17, 2024, concurrently with the Receiver Notice and the Receiver’s response to the petition described above, the Receiver filed a motion for an order (the Intervention Motion) granting the Receiver leave to intervene in this action and vacating the Award.

In support of the Intervention Motion, the Receiver submits a declaration of his counsel, Teddy M. Kapur (Kapur), who states that he became aware of the Arbitration Proceeding, in which TSB sought more than $17.7 million from one of the subjects of the Receivership, on August 8, 2024, the date the Receiver was appointed pursuant to the Receivership Order. (Kapur Decl., ¶ 3.) Kapur further states that on August 9, 2024, he called TSB’s counsel, John Kinsey (Kinsey), and left a voicemail regarding the entry of the Receivership Order. (Ibid.) On August 11, 2024, Kapur emailed a copy of the Receivership Order to Kinsey and requested that TSB agree to extend arbitration deadlines by thirty days. (Kapur Decl., ¶ 3 & Exh. A [Aug. 11, 2024, email to Kinsey].)

Kapur also states that on August 12, 2024, Kinsey transmitted an email declining to consent to a stay of the arbitration deadlines. (Kapur Decl., ¶ 4 & Exh. B [email from Kinsey].) On that same day, Kapur learned that a trial was scheduled in the Arbitration Proceeding for August 26, 2024. (Kapur Decl., ¶ 5.)

Kapur asserts that on August 13, 2024, he sent a letter to the Arbitrator to advise him of the appointment of the Receiver, and to request that the Arbitrator stay the Arbitration Proceeding for 90 days. (Kapur Decl., ¶ 6 & Exh. C.) The Receiver’s request was opposed by TSB, who disputed the Receiver’s standing to seek relief. (Kapur Decl., ¶ 6 & Exh. D.)

On August 19, 2024, the Arbitrator transmitted a “Memorandum Email Order” denying a stay of the Arbitration Proceeding for the reasons stated in TSB’s opposing letter. (Kapur Decl., ¶ 7 & Exh. E.) On that same day, TSB served a “Corrected Memorandum of Points and Authorities in Support of Arbitration Award” on the Receiver’s counsel. (Kapur Decl., ¶ 8 & Exh. F.) Kapur asserts that his firm was not served with copies of supporting declarations or exhibits. (Kapur Decl., ¶ 8.)

On August 22, 2024, Kapur transmitted a letter requesting that the Arbitrator reconsider his decision to deny the Receiver’s request for a stay, which was also opposed by TSB. (Kapur Decl., ¶ 9.) The Arbitrator denied the Receiver’s request for reconsideration on August 24, 2024, and continued the Arbitration Proceeding to September 11, 2024. (Kapur Decl., ¶ 9 & Exh. G.) On August 27, 2024, the Arbitrator confirmed that the arbitration hearing would proceed on September 13, 2024. (Kapur Decl., ¶ 10 & Exh. H.)

Kapur asserts that his firm was not served with a copy of the present petition, which counsel became aware of by searching the court’s docket. (Kapur Decl., ¶ 12.) A colleague of Kapur, Gail Greenwood (Greenwood), requested a copy of the proof of service of the petition from TSB’s counsel, which Kapur and Greenwood have not received. (Kapur Decl., ¶ 12 & Exh. J.)

The Intervention Motion is also supported by a declaration of the Receiver, who states that Andersen is a subject of the Receivership Action, that the Receiver has become aware of 15 actions pending against Andersen, and that dozens of claimants have initiated complaints before the California Department of Food and Agriculture in a process that handles disputes for producers of agricultural products. (Stapleton Decl., ¶ 4.) The Receiver asserts that he requested a postponement of the Arbitration Proceeding because, at this stage of his appointment, he does not have complete information regarding the substance of the lawsuits pending against Andersen. (Ibid.)

The Receiver further states that he is focused on the current 2024 harvest and the preservation and sale of the assets in the Receivership, each of which have a significant impact on the recovery available to Andersen’s creditors. (Stapleton Decl., ¶ 5.) The Receiver also asserts that he was denied standing to participate in the Arbitration Proceeding, and that, apart from the corrected memorandum described above, neither he nor his counsel were served with the pleadings submitted by TSB in that proceeding. (Stapleton Decl., ¶ 6.) For these reasons, the Receiver asserts, he did not attend the arbitration and, to the best of his knowledge, believes that no one appeared on behalf of Andersen. (Ibid.)

TSB opposes the Intervention Motion. In support of its opposition, TSB submits the declaration of its counsel, Scott D. Laird (Laird), who repeats the allegations of the petition with respect to the commencement of the Arbitration Proceeding by TSB, and who asserts that TSB amended its claim in the Arbitration Proceeding on September 11, 2023, to include claims for fraudulent inducement and breach of contract. (Laird Decl., ¶ 2.) Laird further states that on October 4 and December 21, 2023, Andersen filed in the Arbitration Proceeding, respectively, a crossclaim and a first amended crossclaim asserting claims for breach of contract, fraud in the inducement, intentional and negligent misrepresentation, fraud in factum, money had and received, and for declaratory relief. (Laird Decl., ¶ 4.)

Laird explains that on July 19, 2024, Andersen’s counsel in the Arbitration Proceeding advised the Arbitrator and TSB that it no longer represented Andersen, and that future communications should be addressed to Allen Soong (Soong), Chief Restructuring Officer. (Laird Decl., ¶ 6 & Exh. 1.) According to Laird, Soong confirmed that he is not a licensed attorney, and that “ ‘the company does not have replacement counsel in this matter at this time due to liquidity constraints….’ ” (Laird Decl., ¶ 7 & Exh. 2.) Laird states that no motion to be relieved of counsel was filed in the Arbitration Proceeding. (Laird Decl., ¶ 7.)

According to Laird, on July 21 and 22, 2024, he requested documentation confirming Soong’s appointment as an officer of Andersen. (Laird Decl., ¶ 8 & Exh. 3 [Jul. 22, 2024, email exchange between Laird and Soong].) Attached to the Laird declaration as exhibit 4 is a copy of the Written Consent of the Board of Directors of Andersen, which Laird received from Soong on July 22, 2024. (Laird Decl., ¶ 10 & Exh. 4.)

Laird contends that on July 29, 2024, TSB filed in the Arbitration Proceeding a motion to strike the pleadings filed by Anderson which was set for hearing on July 30, 2024. (Laird Decl., ¶¶ 11-12.) According to Laird, TSB filed its motion to strike Andersen’s pleadings in the Arbitration Proceeding because Andersen had purportedly failed to comply with its discovery obligations, and because Soong’s attempts to represent Andersen in the Arbitration Proceeding constituted the unauthorized practice of law. (Laird Decl., ¶ 11.) Laird submits a copy of the Arbitrator’s order on TSB’s motion to strike, which was signed by the Arbitrator on July 31, 2024. (Laird Decl., ¶ 13 & Exh. 5.)

Laird declares that Andersen did not secure new legal representation in the Arbitration Proceeding, and that TSB’s counsel continued to serve Soong and Andersen’s prior counsel with all pleadings and documents, including a motion for evidentiary and issue sanctions which was set for a hearing on August 9, 2024, and which Soong and Andersen did not attend. (Laird Decl., ¶¶ 14-15.) Following that hearing, the Arbitrator granted TSB’s motion for evidentiary and issue sanctions. (Laird Decl., ¶ 16.)

Laird does not dispute that on August 13, 2024, the Receiver requested that the Arbitrator continue the arbitration deadlines for 90 days, that TSB opposed that request on multiple grounds including with respect to the Receiver’s purported lack of standing, that the Arbitrator denied the Receiver’s request for a stay of the Arbitration Proceeding on August 19, 2024, and that on August 24, 2024, the Arbitrator denied the Receiver’s request for reconsideration of that decision, which was also opposed by TSB. (Laird Decl., ¶¶ 17-24 & Exhs. 6-11.)

Laird asserts that the parties selected September 13, 2024, for the continued hearing date in the Arbitration Proceeding, which was confirmed by the Arbitrator in an email order dated August 27, 2024. (Laird Decl., ¶ 26 & Exh. 12.) Laird notes that the Arbitrator’s August 27, 2024, order states that “Counsel for the Receiver will provide notice of any request to appear at the hearing as a participating counsel representing a party, or as a nonparticipating counsel representing a silent party with a legal interest by the close of business on Friday, September 6, 2024.” (Laird Decl., ¶ 26.) Laird asserts that the Receiver did not give notice or submit a request to appear at the September 13, 2024, hearing, and did not appear at that hearing. (Laird Decl., ¶¶ 27-28.)

In support of its opposition to the Intervention Motion, TSB also submits a request for judicial notice of an answer (the Andersen Answer) filed by Michael Andersen and Patrick Andersen on September 23, 2024, in Superior Court of Sacramento County case no. 24CV013878, entitled TSB AG Inc. v. Andersen & Sons Shelling, Inc., et al. (TSB RJN [Intervention Motion], ¶ 1 & Exh. 1.)

The motion of TSB for judgment on the pleadings:

On December 24, 2024, TSB filed a motion for judgment on the pleadings (the MJP) as to the Receiver Notice, the Receiver’s response to the petition, and the Intervention Motion. The MJP is made on the sole ground that the Receiver does not have standing to appear in this action or to present a defense. (Notice of MJP at p. 1, ll. 11-12.)  

The MJP is supported by a declaration of TSB’s counsel, Marisa L. Balch (Balch), in which Balch sets forth a description of TSB’s counsel’s efforts to meet and confer with the Receiver’s counsel regarding the MJP. (See Balch Decl., ¶¶ 2-6.) TSB also submits a request for judicial notice of the Receiver Notice described above. (TSB RJN [MJP], ¶ 1 & Exh. 1.)

The Receiver opposes the MJP. In its opposition to the MJP, the Receiver requests that the court strike the MJP, and a memorandum and supporting Laird declaration separately filed by TSB on December 24, 2024, in support of the petition (collectively, the TSB Memorandum), on the grounds that the MJP and TSB Memorandum present duplicative arguments which constitute improper supplemental opposition to the Intervention Motion.

In support of his opposition to the MJP, the Receiver submits a declaration of his counsel, Greenwood, in which Greenwood describes her communications with Balch regarding the timing of the MJP, the propriety of disputing the Receiver’s standing in a separately filed motion, and Greenwood’s request that Balch reconsider the MJP to permit the parties to address a resolution based on a claim within the Receivership Action, among other things. (Greenwood Decl., ¶¶ 3-5 & Exh. A.)

Greenwood further states that Balch’s law firm represents another creditor, Valley Pride Ag Co., in Superior Court of Fresno County case no. 24CECG02781, entitled Valley Pride Ag Co. v. Andersen & Sons Shelling, Inc. (the Fresno Action). (Greenwood Decl., ¶ 6.) Attached to the Greenwood declaration as exhibit B is a copy of a tentative ruling issued in the Fresno Action on November 19, 2024, and adopted on December 9, 2024. The court has no record of a request by the Receiver for judicial notice of that ruling.

Analysis:

(1) The Intervention Motion

Under Code of Civil Procedure section 387, “[a]n intervention takes place when a nonparty, deemed an intervenor, becomes a party to an action or proceeding between other persons by”, among other things, “[u]niting with a defendant in resisting the claims of a plaintiff.” (Code Civ. Proc., § 387, subd. (b)(2).)

The court “shall, upon timely application,” permit a nonparty to intervene in the action if “[a] provision of law confers an unconditional right to intervene” or “[t]he person seeking intervention claims an interest relating to the property or transaction that is the subject of the action and that person is so situated that the disposition of the action may impair or impede that person’s ability to protect that interest, unless that person’s interest is adequately represented by one or more of the existing parties." (Code Civ. Proc., § 387, subd. (d)(l)(A)-(B).)

Further, “[t]he court may, upon timely application, permit a nonparty to intervene in the action or proceeding if the person has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both.” (Code Civ. Proc., § 387, subd. (d)(2).)

“The purposes of intervention are to protect the interests of those who may be affected by the judgment [citations] and to obviate delay and multiplicity of actions [citations]….” (San Bernardino County v. Harsh Cal. Corp. (1959) 52 Cal.2d 341, 346.) “The trial court has the discretion to allow intervention where the proper procedures are followed, provided: (1) the intervenor has a direct and immediate interest in the litigation, (2) the intervention will not enlarge the issues in the case, and (3) the reasons for intervention outweigh opposition by the existing parties.” (Hinton v. Beck (2009) 176 Cal.App.4th 1378, 1382-1383.) “[I]n order for an interest to be sufficiently direct and immediate, it is not necessary that the intervener have a pecuniary interest in the litigation” or “a specific legal or equitable interest in the subject matter of the litigation.” (People ex rel. Rominger v. County of Trinity (1983) 147 Cal.App.3d 655, 661.)

As grounds for his request for leave to intervene in this action asserted in the Intervention Motion, the Receiver asserts that by entering the Receivership Order, the court in the Receivership Action recognized the dire financial circumstances of Andersen and its related entities, and the need to operate, manage, and preserve Andersen’s assets, liens, and business for disposition in accordance with the final judgment. The Receiver also asserts that the Receivership Order expressly authorizes him to take over or intervene in litigation involving Andersen. For these reasons, the Receiver argues, it is necessary for the Receiver to intervene in this proceeding for the purpose of protecting the orderly disposition of the property of, and claims and rights of creditors seeking recovery from, the estate which is the subject of the Receivership.

“Receivers are officers of the court appointing them. [Citations.] They have no judicial powers per se [citation], but act under the authority of the appointing court and possess those powers conferred by the order of appointment and the course and practice of that court [citation]. It is sometimes said that a receiver ‘stands in the shoes of’ the entity as to which a receivership has been instituted. [Citation.] Whatever the general accuracy of this description, especially in cases involving business or property concerns, ‘an equity receiver does not merely inherit an owner’s rights; the receiver is an officer of the court entrusted with administration of the property. [Citations.]’ [Citation.]” (In re Estevez (2008) 165 Cal.App.4th 1445, 1459 (Estevez).)

A receiver “is appointed by the court to take charge, under its directions, of property in litigation, or which is involved in the proceedings before it, with a view to its care and preservation for the parties to whom the court may ultimately decide that it belongs. The powers and duties of each are special, and limited to such as are defined by statute, or expressed in the order of his appointment, or which he may from time to time receive for the purpose of more effectually preserving the estate intrusted to his charge.” (In re Moore’s Estate (1891) 88 Cal. 1, 3.) “As an officer of the court, a receiver is not an agent of any particular party to the action, but represents all persons interested in the property. [Citation.] Property in receivership remains under the court’s control and continuous supervision….” (City of Santa Monica v. Gonzalez (2008) 43 Cal.4th 905, 930.)

The appointment of a receiver “is an ancillary proceeding concerned with the preservation of the property subject to litigation pending its ultimate disposition pursuant to final judgment.” (Maggiora v. Palo Alto Inn, Inc. (1967) 249 Cal.App.2d 706, 712; see also Steinberg v. Goldstein (1954) 129 Cal.App.2d 682, 686 (Steinberg) [the purpose of the appointment is to preserve property so that any relief awarded by the judgment is effective].) Such an appointment “involves the taking of the defendant’s property from his possession….” (Bank of Woodland v. Stephens (1903) 144 Cal. 659, 660.) “The extent of the property embraced by a receivership is a question the court appointing the receiver has the power and jurisdiction to determine, and it may therefore determine whether any particular property is or is not involved in the action and in the receivership proceeding.” (Steinberg, supra, 129 Cal.App.2d at p. 686.)

Though the appointment of a receiver “in no way affects the title of any party to the property involved, [it] preserves the property and keeps it within the jurisdiction until the rights of the parties can be determined.” (Loaiza v. Levy (1890) 85 Cal. 11, 36.) “A receiver occupies a position generally analogous to that held by an executor in the law of probate or by a trustee in the law of bankruptcy.” (Shannon v. Superior Court (1990) 217 Cal.App.3d 986, 993.) Further, a receiver generally, with the court’s permission, “can do anything the corporation might have done to make the most out of the assets in his hands….” (Pacific Ry. Co. v. Wade (1891) 91 Cal. 449, 455.) Stated another way, the appointment of a receiver “is intended to have the effect of a preliminary injunction to preserve the property.” (Tibbets v. Cohn (1897) 116 Cal. 365, 369.)

Consistent with the points and authorities discussed above, the Receivership Order expressly provides that the Receiver “is ... appointed … to take and hold possession, custody and control of the Receivership Estate”, which is defined in the Receivership Order to include “all … tangible and intangible property of [Andersen]….” (Receiver Notice, Exh. A at p. 3, ll. 25-27 & p. 5, ll. 13-17.)

The Receivership Order, which defines the powers and responsibilities of the Receiver, grants the Receiver the discretion, without further court order, to “take over, institute, defend, prosecute, intervene in, or seek a blanket stay of, any lawsuits and proceedings related to the Receivership Estate, any entity holding an interest in the assets that are part of the Receivership Estate, or the Receiver, including, but not limited to, the issuance of subpoenas, conducting and participating in discovery, taking depositions, the pursuit of contempt actions, and otherwise pursue all remedies available by law to ensure compliance with the Receiver’s authority granted herein, in this state or in other states and countries, as may be reasonably necessary in the Receiver’s business judgment to protect the Receivership Estate.” (Receiver Notice, Exh. A at p. 5, ll. 18-19 & p. 15, ¶ 27.)

In addition, under Code of Civil Procedure section 568, a “receiver has, under the control of the Court, power to bring and defend actions in his own name, as receiver; to take and keep possession of the property, to receive rents, collect debts, to compound for and compromise the same, to make transfers, and generally to do such acts respecting the property as the Court may authorize.” (Code Civ. Proc., § 568.)

Pursuant to the terms of the Receivership Order and statutory authority further discussed above, the Receiver has a direct interest in present action. For example, and as noted above, the Award includes a finding that, as of September 16, 2024, Andersen owed to TSB the amount of $17,418,706.77 in damages, inclusive of late charges and prejudgment interest. (Pet., Attachment 2 at p. 25.) The Award further provides that TSB is entitled to recover from Anderson the amount of $323,890.05 in fees and costs. (Ibid.) In the present proceeding, TSB requests that the court, upon confirmation of the Award, enter judgment against Andersen pursuant to Code of Civil Procedure section 1287.4. (Pet., ¶ 8.)

Code of Civil Procedure section 1287.4 provides that, to the extent the court grants the petition of TSB and enters judgment in conformity with the Award, that judgment “has the same force and effect as, and is subject to all the provisions of law relating to, a judgment in a civil action of the same jurisdictional classification; and it may be enforced like any other judgment of the court in which it is entered, in an action of the same jurisdictional classification.” (Code Civ. Proc., § 1287.4.) As a judgment entered in conformity with the Award would establish that that Andersen, as the judgment debtor, owes and must pay money to TSB pursuant to the Award, that judgment will constitute a money judgment under Code of Civil Procedure section 680.270. (Code Civ. Proc., §§ 680.250 [defining “judgment debtor”] & 680.270 [defining “money judgment”]; Felczer v. Apple Inc. (2021) 63 Cal.App.5th 406, 415 [general discussion of money judgments].)

Under Code of Civil Procedure section 695.010, “all property of [Andersen] is subject to enforcement of a money judgment.” (Code Civ. Proc., § 695.010, subd. (a).) Noted above, the Receivership Estate includes the property of Andersen pursuant to the terms of the Receivership Order.

Considering the nature of the relief requested in the petition and that the Receiver is, for all reasons discussed above, presently in possession of the property of Andersen that would be subject to enforcement of the money judgment requested by TSB in the petition, the Receiver has a direct interest in the subject of this action. In addition, the disposition of this action by entering judgment in conformity with the Award may impede the Receiver’s ability and duty to protect the Receivership Estate which includes the property of Andersen, to the extent that property is subject to the judgment. For these and all reasons further discussed above, the Receiver has made a sufficient showing that he has a right to intervene in this action. (Simpson Redwood Co. v. State of California (1987) 196 Cal.App.3d 1192, 1200 [intervention statute is “liberally construed in favor of intervention”].)
 

Moreover, the Receivership Order expressly grants the Receiver the authority and discretion to defend, intervene in, or seek a stay of “any … proceedings” related to the Receivership Estate described above and in that order. (Receiver Notice, Exh. A at pp. 15-16, ¶ 27.) The Receiver is also empowered to do anything Andersen might have done with respect to assets or property that are subject to enforcement of the judgment requested by TSB in this proceeding. For these additional reasons, the Receiver has an interest relating to property which is the subject of this proceeding.

In its opposition to the Intervention Motion, TSB contends that the Receivership Order has no precedential value, that the court in the Receivership Action has no jurisdiction over TSB, and that the Receiver has no standing.

TSB offers no reasoned argument showing why the court was without jurisdiction to appoint the Receiver. (See, e.g., Mines v. Superior Court (1932) 216 Cal. 776, 778-780 [discussion of court’s jurisdiction to appoint receiver].) TSB also fails to explain why the property of Andersen is not included within the Receivership Estate, or why property within the Receivership Estate is not subject to enforcement of any judgment that may be entered in this action to the extent the court grants the petition of TSB.

Further, the Receiver’s possession of the property of Andersen described in the Receivership Order and above is that of the court, which has “jurisdiction to determine all issues relating to the receivership.” (Estevez, supra, 165 Cal.App.4th at p. 1459; Havemeyer v. Superior Court (1890) 84 Cal. 327, 389-390; O’Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1062.) “ ‘Even between superior courts of different counties, having coequal jurisdiction over a matter, the first court of equal dignity to assume and exercise jurisdiction over a matter acquires exclusive jurisdiction….’ [Citation.]” (Glade v. Glade (1995) 38 Cal.App.4th 1441, 1450, original italics.) For these and all further reasons discussed above, TSB’s contentions that court in the Receivership Action was or is without jurisdiction, or that the Receivership Order has no precedential effect in this proceeding, are without merit. (See also Schmier v. Supreme Court (2002) 96 Cal.App.4th 873, 881-882 [discussing the meaning of “precedent”].)

As to the remaining arguments offered by TSB, including with respect to whether the present action concerns or relates to the Receivership Estate or whether the Receiver has a direct interest in this action, the same reasoning and analysis apply. As the property of Andersen, and the Receivership Estate, are subject to enforcement of any judgment entered in favor of TSB in this proceeding, the present action concerns the Receivership Estate, and the Receiver has a direct interest in its outcome.

For all reasons further discussed above, the Receiver has shown that the conditions for permissive and mandatory intervention set forth in Code of Civil Procedure section 387 have been satisfied. TSB also offers no reasoned argument showing why the Receiver’s request for leave to intervene is untimely or procedurally inappropriate. Therefore, and for all reasons discussed herein, to the extent the Receiver requests leave to intervene in this proceeding, the court will grant the Intervention Motion.

As grounds for the request for an order vacating the Award, the Receiver contends that by refusing to recognize the Receiver’s standing to appear and be heard on behalf of Andersen, denying the Receiver’s request to postpone or stay the Arbitration Proceeding, and refusing to recognize the Receiver as an interested party, the Arbitrator committed error which was prejudicial to the Receiver, Andersen, Andersen’s creditors, and the Receivership Estate.

In its opposition to the Intervention Motion, TSB contends that the Receiver failed to address the issue of standing during the Arbitration Proceeding, including when it was first raised by TSB and at the time the Receiver requested reconsideration of the Arbitrator’s denial of the Receiver’s request for a continuance, abandoned the Arbitration Proceeding, and failed to provide notice or any request to appear at the hearing to address the standing issue. For these reasons, TSB contends, the Receiver has no right to object to the Award based on standing.

As to the arguments offered by TSB with respect to the precedential or binding nature of the Receivership Order, the same analysis and reasoning apply. For all reasons further discussed above, TSB has failed to show why the Receivership Order is not binding on this court, or why the court in the Receivership Action lacked jurisdiction to appoint the Receiver or enter the Receivership Order.

Further, to the extent TSB contends that the Receiver lacks standing to request that the Award be vacated, the same analysis and reasoning also apply here. For all reasons discussed above, the Receiver has “an actual and substantial interest in” and would be “benefited or harmed by, the ultimate outcome of [the] action.” (City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 59.) For these and all further reasons discussed above, the Receiver has standing to make the requests asserted in the Intervention Motion.

As to TSB’s contention that the Receiver has waived the issue of standing, “ ‘ “waiver” means the intentional relinquishment or abandonment of a known right.’ [Citations.] Waiver requires an existing right, the waiving party’s knowledge of that right, and the party’s ‘actual intention to relinquish the right.’ [Citation.] ‘ “Waiver always rests upon intent.” ’ [Citation.] The intention may be express, based on the waiving party’s words, or implied, based on conduct that is ‘ “so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.” ’ [Citations.]” (Lynch v. California Coastal Com. (2017) 3 Cal.5th 470, 475.)

Based on the available evidence and information further detailed above, the present record reflects that on August 13, 2024, the Receiver notified the Arbitrator of the Receivership Order and requested a stay of the Arbitration Proceeding. (Kapur Decl., ¶ 6 & Exh. C.) In that communication to the Arbitrator, the Receiver expressly stated that he “has been appointed to care for and preserve assets of the Receivership Estate, and has full control and authority over the Obligors’ various business operations, including that of Andersen…”, and “has control over all legal proceedings, with authority to ‘seek a blanket stay of any lawsuits and proceedings related to the Receivership Estate’ as described in paragraph 27 of the Receivership Order.” (Kapur Decl., Exh. C at p. 1.)

The content of the Receiver’s August 13, 2024, communication to the Arbitrator shows that the Receiver expressly and impliedly asserted the Receiver’s standing to participate in the Arbitration Proceeding, and to request a stay of that proceeding.

The present record also shows that the Arbitrator denied the Receiver’s requests for a stay of the Arbitration Proceeding “[d]ue to a lack of standing on the part of the Receiver … to make the request….”. (Kapur Decl., Exh. E [Arbitrator’s Aug. 19, 2024, Memorandum Order] & Exh. G [Arbitrator’s Aug. 24, 2024, Memorandum Order].) It can be inferred from the Arbitrator’s rulings that the Arbitrator and TSB also understood that the Receiver was asserting its standing to participate in and request a stay of the Arbitration Proceeding.

Though the evidence and information described above shows that the Arbitrator directed counsel for the Receiver to provide notice of any request to appear at the hearing either “as a participating counsel representing a party” or as a “non-participating counsel representing a silent party with a legal interest” (Kapur Decl., Exh. H), there is no evidence showing that counsel for the Receiver also represented any party in the Arbitration Proceeding, including Andersen. Furthermore, the record reflects that the Receiver did not attend the hearing because he was denied standing to participate. (Stapleton Decl., ¶ 6.) For these reasons, the undisputed evidence and information presented by the parties is sufficient to show that the Receiver was precluded from participating in the Arbitration Proceeding based on the Arbitrator’s determination that the Receiver did not have standing.

For all reasons noted above, the available information and evidence shows that the Receiver asserted the standing issue in the Arbitration Proceedings on two occasions. Considering that the record also shows that the Arbitrator made a binding ruling that the Receiver lacked standing to request a stay of or participate in the Arbitration Proceeding, which the Arbitrator declined to reconsider notwithstanding the Receiver’s request, TSB fails to explain, with reasoned argument, why the Receiver was required to raise the issue again at the hearing. (See Sutherland v. Barclays American/Mortgage Corp. (1997) 53 Cal.App.4th 299, 313 [the law does not require “futile or useless acts”].)

As further discussed above, the Receiver expressly and impliedly raised the issue of standing to participate in the Arbitration Proceeding. For this reason, the evidence and information does not suggest that the Receiver relinquished the right to assert the issue of standing in the Arbitration Proceeding. Further, the Receiver’s conduct in the Arbitration Proceeding as further described above is not inconsistent with an intent to assert the Receiver’s standing to participate in that proceeding. For these reasons, the court finds that the Receiver did not waive the issue of standing in the Arbitration Proceeding.

“The grounds for vacating an arbitration award are limited to those specified by statute.” (Brawerman v. Loeb & Loeb LLP (2022) 81 Cal.App.5th 1106, 1114.) Relevant here, the court “shall vacate” an arbitration award “if the court determines” that “[t]he rights of the party were substantially prejudiced by misconduct of a neutral arbitrator”, “[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted”, or “[t]he rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.” (Code Civ. Proc., § 1286.2, subd. (a)(3)-(5).)

Pursuant to Code of Civil Procedure section 1286.2, the court may not vacate the Award unless each of the conditions set forth in section 1286.4 are met, which requires the service and filing of an appropriate petition or response requesting that the award be vacated. (Code Civ. Proc., § 1286.4, subd. (a).) The court finds, and TSB does not appear to dispute, that the conditions set forth in Code of Civil Procedure section 1286.4 have been satisfied.

Though a court “may not review the merits of the controversy, the sufficiency of the evidence supporting the award, or the validity of the arbitrator’s reasoning ... [¶] courts may, indeed must, vacate an arbitrator’s award when it violates a party’s statutory rights or otherwise violates a well-defined public policy.” (Department of Personnel Administration v. California Correctional Peace Officers Assn. (2007) 152 Cal.App.4th 1193, 1200.)

For all reasons discussed above, the Receiver is expressly empowered by statute, and by the Receivership Order, to defend the Arbitration Proceeding in his own name. (Code Civ. Proc., § 568; City of Sierra Madre v. SunTrust Mortgage, Inc. (2019) 32 Cal.App.5th 648, 656 [discussing statutory powers of a receiver].) By denying the Receiver’s request for a stay of the Arbitration Proceeding and precluding the Receiver from participating in the hearing, on the grounds that the Receiver was without standing, the Arbitrator violated the Receiver’s statutory right to assert a defense in the Arbitration Proceeding. For this reason, “according finality to the award would be inconsistent with protecting the [Receiver’s] statutory rights.” (Epic Medical Management, LLC v. Paquette (2015) 244 Cal.App.4th 504, 513.)

Furthermore, “[t]he parties to the arbitration are entitled to be heard, to present evidence and to cross-examine witnesses appearing at the hearing….” (Code Civ. Proc., § 1282.2, subd. (d).) The parties here do not dispute that Andersen did not participate in the Arbitration Proceeding based on the orders issued by the Arbitrator. (See, e.g., Laird Decl., Exh. 5 [Arbitrator’s July 31, 2024, order precluding Andersen from proceeding and deeming Andersen to have abandoned its defense].) Further, the Receivership Order provides that Andersen, who is an “Enjoined Party” as that term is defined in the Receivership Order, “[s]hall not directly or indirectly interfere in any manner with the discharge of the Receiver’s duties … or … any related litigation…” (Receiver Notice, Exh. A [Receivership Order] at p. 22, ll. 10-12 [defining “Enjoined Parties] & p. 24, ¶ 9.)

As more fully discussed above, though the Receiver has statutory and legal authority and standing to request a stay of and to defend the Arbitration Proceeding, the Arbitrator also precluded the Receiver from participating in the Arbitration Proceeding, and from presenting any defense to the claims asserted by TSB.

Though an arbitrator’s refusal “to hear evidence material to the controversy” constitutes grounds to vacate an arbitration award under Code of Civil Procedure section 1286.2, subdivision (a)(5), that provision rests “on more than a simple error in applying the rules of evidence.” (Heimlich v. Shivji (2019) 7 Cal.5th 350, 368 (Heimlich).) Instead, Code of Civil Procedure, subdivision (a)(5), is “a safety valve in private arbitration that permits a court to intercede when an arbitrator has prevented a party from fairly presenting its case.” (Hall v. Superior Court (1993) 18 Cal.App.4th 427, 439 (Hall).) “It comes into play, for example, when an arbitrator, without justification, permits only one side to present evidence on a disputed material issue. [Citation.] The Arbitration Act codifies ‘the fundamental principle that “[a]rbitration should give both parties an opportunity to be heard.” [Citation.] ... [T]he opportunity to be heard must be extended to all parties equitably.’ [Citation.] To conduct an arbitration without abiding by that principle evinces bias, constituting misconduct.” (Heimlich, supra, 7 Cal.5th at pp. 368-369.)

Under the circumstances present here, the Arbitrator did not merely refuse to consider evidence in defense of the claims asserted by TSB based on an incorrect legal foundation. Instead, the Arbitrator wholly refused to hear any relevant evidence on the issues before the Arbitrator, based on the Arbitrator’s determination that the Receiver lacked standing to request a stay of, intervene in, defend, or participate in the Arbitration Proceeding which, for all reasons further discussed above, was erroneous. Under these circumstances, the Arbitrator’s refusal to hear any evidence material to the matters at issue from any party other than TSB constitutes misconduct for purposes of subdivision (a)(5) of Code of Civil Procedure section 1286.2. (Royal Alliance Associates, Inc. v. Liebhaber (2016) 2 Cal.App.5th 1092, 1108 (Royal Alliance) [arbitrators’ refusal to offer oral evidence or question witnesses constituted misconduct].)

The court further notes that the Award sets forth the Arbitrator’s findings of fact and conclusions of law. (Pet., Attachment 2 at pp. 6 & 12.) Considering that neither Andersen nor the Receiver were permitted to participate in or present evidence at the arbitration hearing to dispute the claims asserted by TSB, the present record gives rise to an inference that the Arbitrator relied on the absence of such evidence to support the findings and conclusions reflected in Award. It can further be inferred that the Arbitrator necessarily received evidence only from TSB and relied on the credibility of TSB’s witnesses during the hearing. For these reasons, “the [A]rbitrator might well have made a different award” had the Arbitrator allowed the Receiver to participate in the Arbitration Proceeding, including by requesting a stay of that proceeding. (Hall, supra, 18 Cal.App.4th at p. 439, Royal Alliance, supra, 2 Cal.App.5th at p. 1110 [also noting that “the arbitration panel could not fully weigh the credibility of” witness statements “due to the absence of cross-examination”].)

For all reasons further discussed above, the undisputed record reflects that the Arbitrator’s denials of the Receiver’s multiple requests for a stay of the Arbitration Proceeding were based on an erroneous ruling by the Arbitrator that the Receiver lacked standing, which violated the Receiver’s statutory rights as well as the power and authority granted to the Receiver pursuant to the Receivership Order. Furthermore, by denying the Receiver the ability to participate in the Arbitration Proceeding based on an erroneous determination as to the issue of standing, the Arbitrator wholly failed to hear relevant evidence on the matters at issue in the Arbitration Proceeding. For these reasons, the court finds that the Arbitrator engaged in misconduct.

The court further finds that the Receiver’s rights were substantially prejudiced by the conduct of the Arbitrator, based on the Arbitrator’s denial of the Receiver’s standing and requests to postpone or permit the Receiver to participate in the Arbitration Proceeding, upon sufficient cause, and on the Arbitrator’s refusal to hear evidence material to the controversy. For these reasons, the court will grant the Intervention Motion as to the Receiver’s request for an order vacating the Award.

As the court will grant the Intervention Motion on the grounds further discussed above, the court need not reach the additional points and arguments asserted by the Receiver in the Intervention Motion, and by TSB in its opposition to that motion.

Further, the court will order the Receiver to serve notice of the court’s ruling herein in accordance with Code of Civil Procedure section 387, subdivision (e).

TSB’s request for judicial notice:

As to TSB’s request that the court take judicial notice of the Andersen Answer, though the Andersen Answer is a court record and a proper subject of judicial notice (Evid. Code, § 452, subd. (d)(1)), this record is not relevant to the issues presented in the Intervention Motion, or necessary to the court’s determination of whether the Receiver has standing to intervene in this proceeding, or whether the Award should be vacated. (See Evid. Code, § 350; Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, overruled on other grounds in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276; Larner v. Los Angeles Doctors Hospital Associates, LP (2008) 168 Cal.App.4th 1291, 1298, fn. 2.) For these reasons, the court will deny TSB’s request for judicial notice of the Andersen Answer.

(2) The MJP

The MJP is made on the same grounds as those further and fully discussed above. The same reasoning and analysis apply to the arguments presented by TSB in the MJP. For all reasons discussed above, and as the court will grant the Intervention Motion, the court will deny the MJP.

As to TSB’s request for judicial notice of the Receiver Notice filed in this action, though not necessary, the court will grant judicial notice of this court record. (Evid. Code, § 452, subd. (d)(1).)

In support of its reply to the Receiver’s opposition to the MJP, TSB asserts objections to material appearing in the declaration of Greenwood described above. The court considers only that evidence which is admissible and relevant to the matters at issue in the MJP.

Regarding the Receiver’s request for an order striking the MJP and the TSB Memorandum, this request is procedurally deficient.

“An application for an order is a motion.” (Code Civ. Proc., § 1003.) As the receiver requests an order striking the MJP and TSB Memorandum, the Receiver’s request is effectively a motion. Assuming without deciding that the Receiver’s request to strike the MJP and TSB Memorandum is appropriate under Code of Civil Procedure section 436, a motion to strike requires written notice. (Code Civ. Proc., § 1005, subd. (a)(13), § 435, & § 436; Cal. Rules of Court, rule 3.1322.)

The Receiver has not given appropriate written notice of its purported motion to strike. (Code Civ. Proc., § 1010 [setting forth the requirements of a written notice]; see also Cal. Rules of Court, rule 3.1110(a) [“[a] notice of motion must state in the opening paragraph the nature of the order being sought and the grounds for issuance of the order”].) Therefore, the court is not required to consider the Receiver’s request to strike the MJP or the TSB memorandum. (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1125 [“[a]s a general rule, the trial court may consider only the grounds stated in the notice of motion”].)

Even if the court were to consider the Receiver’s request notwithstanding the procedural deficiencies described above, the request would be denied. As the court will deny the MJP for all reasons discussed above, the Receiver’s request is moot. Further, “[w]hile under [Code of Civil Procedure] section 436, a court at any time may, in its discretion, strike portions of a complaint that are irrelevant, improper, or not drawn in conformity with the law, matter that is essential to a cause of action should not be struck and it is error to do so.” (Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281.) The TSB memorandum includes matters which appear to be essential to the petition filed by TSB. Therefore, the court may not, under the present circumstances, strike the TSB Memorandum.

The court’s denial of the Receiver’s request to strike the TSB Memorandum is without prejudice to any pleading challenge that may be filed in the future by the Receiver.