Cando Properties LLC vs Island View Ranch LLC

Case Number

24CV06886

Case Type

Hearing Date / Time

Mon, 08/11/2025 - 10:00

Nature of Proceedings

CMC; Motion re Authorizing Sale of Property

Tentative Ruling

Cando Properties, LLC v. Island View Ranch, LLC   

Case No. 24CV06886

           

Hearing Date: August 11, 2025                                  

HEARING:              Plaintiff Cando Properties, LLC and Jointly with Receiver Michael Issa’s Motion for Order Authorizing Sale of 3376 Foothill Road, Carpinteria, California 93013, Free and Clear of Liens, Claims, and Encumbrances

ATTORNEYS:        For Plaintiff Cando Properties, LLC: Patrick D. Goggin, Lewis R. Landau

                             For Defendant Island View Ranch, LLC: Joshua E. Lynn

                        Receiver J. Michael Issa

                        For Non-Party Irwin Overbach, Trustee of The Overbach Family Trust Dated March 30, 1989: William E. Winfield

           

                                   

TENTATIVE RULING:

The motion for order authorizing sale of 3376 Foothill Road, Carpinteria, California 93013, free and clear of liens, claims, and encumbrances is denied without prejudice.

Background:

This action commenced on December 9, 2024, by the filing of the complaint by plaintiff Cando Properties, LLC (“Cando” or ‘plaintiff) against defendant Island View Ranch, LLC (“Island View” or “defendant”) for breach of contract and unjust enrichment.

As alleged in the complaint:

On July 23, 2021, a written agreement was entered into by Cando and Island View. (Compl., ¶ BC-1 & Exh. A.) On the same day, July 23, 2021, Island View breached the agreement by failing to make any principal or interest payments on the $200,000.00 promissory note. (Id. at ¶ BC-2.) Due to Island View making no payments, Cando has suffered losses of $200,000.00 plus interest of 10 percent since July 23, 2021. (Id. at ¶ BC-4.)

On January 2, 2025, Island View filed a notice of stay of proceedings based on its filing a Chapter 11 Bankruptcy Case. On May 15, 2025, Cando filed a notice of termination of the stay due to the Bankruptcy case being dismissed.

On May 25, 2025, the parties filed a stipulation and order for issuance of writ of attachment, appointment of receiver, and temporary restraining order. As a result of the stipulation and order, Cando was granted a right to attach order and wit of attachment in the amount of $200,000.00 plus interest and fees, J. Michael Issa (“Issa”) was appointed as receiver for the property located at 3378 Foothill Road (the “property”), Carpinteria, Issa was ordered to post a bond of $5,000.00, and a temporary restraining order was issued restraining and enjoining any person from interfering with the receiver’s discharge of duties.

On July 18, 2025, Cando, jointly with Issa, filed the present motion for an order approving and authorizing the sale of  the property, free and clear of liens, claims, and encumbrances pursuant to a commercial purchase agreement and joint escrow instructions.

Irwin Overbach, Trustee of The Overbach Family Trust Dated March 30,1989 (“Overbach”), opposes the motion. Overbach had not officially attempted to intervene in this action.

The moving parties did not file a reply to the opposition.

Analysis:

The moving parties bring their motion pursuant to Code of Civil Procedure sections 568.5 and 488.700.

“A receiver may, pursuant to an order of the court, sell real or personal property in the receiver's possession upon the notice and in the manner prescribed by Article 6 (commencing with Section 701.510) of Chapter 3 of Division 2 of Title 9. The sale is not final until confirmed by the court.” (Code Civ. Proc., § 568.5.)

Code of Civil Procedure section 488.700 provides:

“(a) If property has been or is sought to be attached, the court may appoint a receiver or order the levying officer to take any action the court orders that is necessary to preserve the value of the property, including but not limited to selling the property, if the court determines that the property is perishable or will greatly deteriorate or greatly depreciate in value or that for some other reason the interests of the parties will be best served by the order. An order may be made under this subdivision upon application of the plaintiff, the defendant, or a person who has filed a third-party claim pursuant to Division 4 (commencing with Section 720.010) of Title 9. The application shall be made on noticed motion if the court so directs or a court rule so requires. Otherwise, the application may be made ex parte.

“(b) If the levying officer determines that property is extremely perishable or will greatly deteriorate or greatly depreciate in value before a court order pursuant to subdivision (a) could be obtained, the levying officer may take any action necessary to preserve the value of the property or may sell the property. The levying officer is not liable for a determination made in good faith under this subdivision.

“(c) Except as otherwise provided by order of the court, a sale of the property pursuant to this section shall be made in the manner provided by Article 6 (commencing with Section 701.510) of Chapter 3 of Division 2 of Title 9 and the proceeds shall be deposited in the court to abide the judgment in the action. Notwithstanding subdivisions (b) and (d) of Section 701.530, notice of sale shall be posted and served at a reasonable time before sale, considering the character and condition of the property.

“(d) If a receiver is appointed, the court shall fix the daily fee of the receiver and may order the plaintiff to pay the fees and expenses of the receiver in advance or may direct that the whole or any part of the fees and expenses be paid from the proceeds of any sale of the property. Except as otherwise provided in this section, the provisions of Chapter 5 (commencing with Section 564) and Chapter 5a (commencing with Section 571) of Title 7 govern the appointment, qualifications, powers, rights, and duties of a receiver appointed under this section.”

Other than those two code sections, the only authority cited by the moving parties is City of Riverside v. Horspool (2014) 223 Cal.App.4th 670 (Horspool). Horspool is cited by the moving parties solely for the conclusory statement that: “[T]he Court has the power to order the sale of property free and clear of liens and encumbrances to facilitate the Receiver’s sale.” (Motion, p. 7, ll. 15-17.)

While the moving parties provide reasons why the property should be sold, conspicuously absent from the motion is any compelling reason why any liens, claims, or encumbrances should be summarily removed.

By way of opposition to the motion, Overbach makes the following arguments: (1) Overbach was not given notice of the stipulation to appoint Issa as receiver as required by California Rules of Court, rule 3.1176; (2) Issa is not being neutral as required by California Rules of Court, rule 3.1179; (3) Issa should not be permitted to disturb Overbach’s lien on the property; and (4) The court should not permit Issa to sell the property free and clear of Overbach’s lien.

In support of the opposition, Overbach submits the declaration of Irwin Overbach (“Irwin”), one of the Trustees of the Family Trust. (Note: To avoid confusion, Irwin Overbach will be referred to by his given name. No disrespect is intended.) By way of the declaration, Irwin declares:

Overbach sold the property to Island View on May 8, 2019. (Irwin Decl., ¶ 3.) Overbach provided seller financing for $4,400,000.00 of the purchase price of the property, and is the current holder of a promissory note in that amount. (Id. at ¶¶ 4, 5 & Exh. A.)

The promissory note on the property is secured by a deed of trust and assignment of rents against the property. (Irwin Decl., ¶ 6 & Exh. B.)

The court has several concerns about whether all interested parties have been afforded adequate due process. Initially, it is clear from the documents filed in this case as well as the bankruptcy case that Cando and Island View were aware of the liens, claims, and encumbrances on the property, yet they failed to provide notice and an opportunity to object to the appointment of Issa to those with a claimed interest in the property. Next, based on statements made in the moving papers, including the declaration of Issa, there is some question regarding whether Issa is acting as a neutral agent of the court for the benefit of all persons or entities that may have an interest in the property as required by California Rules of Court, rule 3.1179(a). Finally, the moving parties have failed to provide any persuasive authority as to why it would be proper for the court to summarily invalidate claims against the property.

The moving parties’ reliance on Horspool is unpersuasive and does not mandate that the court order liens, claims, or encumbrances be removed. At most, Horspool stands for the proposition that the court may do so in very limited circumstances. In that case, as pointed out in the opposition, there existed an entirely different set of facts and exigent circumstances for the sale of property. Here, there do not appear to be any exigent circumstances. And, again, the moving parties provide no legitimate reason for depriving other persons and entities of their claims against the property.

The moving parties have failed to meet their burden. Absent a compelling reason to do so, evidence that all procedural and substantive due process requirements have been met, and persuasive authority to do so, the court will not remove any liens, claims, or encumbrances on the property. The motion will be denied.

Having so ruled: It does appear that all interested parties basically want the property sold. They should meet and confer to determine a fair and equitable solution to any competing claims.