motion to appoint receiver - sterlingcorp.com
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DISTRICT COURT, DENVER COUNTY,
STATE OF COLORADO 1437 Bannock Street, Room 256 Denver, Colorado 80202 Phone Number: 720-865-8301
▲COURT USE ONLY▲
Plaintiff(s): CITY AND COUNTY OF DENVER, a municipal corporation of the State of Colorado
Defendant(s): NICK RINO
Attorney for Plaintiff: Jacques A. Machol, III, #8382 Machol & Johannes, LLC 700 17th Street, Suite 200 Denver, CO 80202-3502 (303) 830-0075 Fax (303) 830-0047
Case Number: Division: Courtroom:
MOTION TO APPOINT RECEIVER
Plaintiff City and County of Denver (the “City”), by and through its attorneys, Machol & Johannes, LLC hereby moves for the appointment of a receiver, and as grounds therefor, states as follows:
FACTUAL BACKGROUND
The City filed a Complaint on June 7, 2016, wherein the relief sought was the appointment of a receiver for the real property listed below; the allegations contained in the Complaint are incorporated herein as if fully set forth.
This Motion concerns the following property (the “Property”):
3351 West Center Avenue, Denver CO, 80219; Schedule No. 0517222017000; Legal Description: L 34 & 35 BLK 18 ADAMS PARK ANNEX
The Property has been on the City’s Neglected and Derelict Building List under Article IX - Neglected and Derelict Buildings, DRMC Sec. 10-138 (a) et seq. (the “Neglected and Derelict Buildings Code,” or the “Code”), and remain so today, notwithstanding repeated efforts by the City to compel Defendant Nick Rino (“Defendant” or “Mr. Rino”), the owner of the Property, to abate the deficiencies of the Property.
The Property is on the Vacant and Derelict Building List of the Neglected and Derelict Buildings Code for good cause. The Property is vacant and derelict. The City
DATE FILED: June 7, 2016 5:17 PM FILING ID: F0DC4AA9E5619 CASE NUMBER: 2016CV32061
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has had reports of transients breaking into, and living in the Property, which makes the Property dangerous to public health and safety.
The Denver Buildings Code has the following provisions concerning unsafe properties:
SECTION 105 - UNSAFE BUILDINGS OR STRUCTURES
105.1 Buildings or Structures. An unsafe structure, building or equipment is one which constitutes a fire hazard or a hazard to life, health, property or publicwelfare by reason of use, occupancy, construction, damage, deterioration, qualityof materials, abandonment or inadequate maintenance. However, without limitation of the foregoing, the Building Official shall deem any structure, building, equipment or project site unsafe when any one or more of the following conditions exist:
. . . .
12. Any dilapidated building of whatever kind which is unused by the owner, or uninhabited because of deterioration or decay, which condition constitutes a fire hazard or subjects adjoining property to danger of damage by deterioration of structural building elements, storm effect, soil erosion or rodent infestation, or which becomes a place frequented by trespassers and transients seeking a temporary hideout or shelter.
The purpose of the Neglected and Derelict Buildings Code is stated in DRMC Sec. 10-138 (a) (Neglected or derelict buildings or property prohibited) as follows:
Purpose. The purpose of this article is to prevent any property in the city from becoming or remaining neglected or derelict, as that term is defined in this article; to mitigate the blighting impacts of these properties; to provide for the regular inspection of properties that are or are likely to become neglected or derelict; and to assess fees for the costs of this program on those properties and owners who have and maintain any neglected or derelict property.
The Manager of Community Planning and Development, City and County of Denver, issued Notice of Violation(s) to the Defendant alleging the Property to be a Vacant and Derelict Building pursuant to DRMC § 10-139(b) to the Defendant for violations of the Denver Revised Municipal Code, and the requirement to submit a remedial plan and to take remedial action pursuant to DRMC § 10-139(c). Defendant was, and remains, the owner of the Property that is subject to the Notices of Violations and has failed to comply with the required remedial action.
A Notice of Order to Show Cause Hearing was issued by Community Planning and Development and served on the Defendant in accordance with DRMC §10-139(e), (f) and (g). A copy of the Notice is attached as Exhibit “1" to the Complaint.
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A Show Cause Hearing was conducted pursuant to the Notice of Order to Show Cause Hearing, in accordance with DRMC § 10-139(h), on July 7, 2010 at 11:00 a.m.
The Hearing Officer issued an Order on July 16, 2010 appointing a Receiver pursuant to DRMC § 10-140(2) and allowing for fines of $999.00 per day pursuant to DRMC § 10-139(k) for every day a continuing violation existed. The Hearing Officer also provided a Stay of Execution on the conditions of: a remedial plan being submitted; all necessary work permits are obtained; work is commenced in a timely fashion and that all work complete is to be inspected by the City and County of Denver inspection division. A copy of the Order is attached hereto as Exhibit “2” and incorporated herein.
The Defendant failed to appeal the Order under C.R.C.P. Rule 106(b) within twenty-eight (28) days of the date of the Order, in accordance with DRMC §12-19. Accordingly, the Order is final and non-appealable.
On May 8, 2013, Community Planning and Development, Inspection Services for the City and County of Denver, mailed a letter and issued Notice of Violation(s) Vacant and Derelict Buildings to Defendant, alleging the referenced property to be a Vacant and Derelict Building pursuant to DRMC § 10-139(c) and also found the Defendant to be a Non-occupant owner and therefore subject to the DRMC § 10-143. Attached is a copy of the May 8, 2013 letter, Exhibit “3” and Notice of Violation(s) Vacant and Derelict Buildings, Exhibit “4”. Exhibits “3” and “4” are incorporated herein.
The May 8, 2013 letter to the Defendant provided the property to be in violation of DRMC § 10-138 – Neglected and Derelict Buildings as described by the Notice of Violation(s). Pursuant to DRMC § 10-139(c), Defendant was required to submit a residential remedial plan to the Manager of Community Planning and Development for review within thirty (30) days of the Notice of Violation. The letter also provided that Defendant was subject to DRMC § 10-143 as a non-occupant owner, which required the Defendant to submit a registration statement to the Manager within thirty (30) days of the date of the Notice of Violation.
A lawsuit was filed by the City and County of Denver against the Defendant concerning the civil penalties assessed in this Court, Case Number 2014CV34513, wherein a monetary Judgment was ultimately entered.
Defendant filed an appeal of the Judgment award to the Colorado Court of Appeals, case number 2015CA1894, which is currently pending.
Notwithstanding the passage of approximately six (6) years since the original Order to Show Cause was entered, the Property remains in a vacant and derelict condition.
ARGUMENT
The City seeks to have a receiver appointed to continue to operate the Property and make it safe to the public while, at the same time: (1) collecting the fees, fines, and
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penalties that have been assessed by the City; and (2) either (a) abating the deficiencies of the Property and making them compliant; (b) demolishing the physical structures on the Property under the proper circumstances; or (c) selling the Property at Judicial Sale, all as approved by this Court.
A Receiver Under the Neglected and Derelict Buildings Code
The Neglected and Derelict Buildings Code specifically contemplates the appointment of a receiver under precisely the circumstances found here. The pertinent provisions of the Neglected and Derelict Buildings Code in support of appointing a receiver are as follows: Note: In this case, the City asked for a receiver, but the Court did not enter an Order to that end. The Defendant was given the opportunity to abate
the problem.
DRMC § 10-140. - Court actions for abatement.
(a) If, after notice and hearing pursuant to this article and a finding of a violation of this article, the owner has failed to abate the violation or comply with abatement deadlines in the manager's final order or in an approved remedial plan, the city, an affected neighboring landowner, or any other person who has suffered damages due to the condition of the property and otherwise has legal standing to bring legal action, may commence an action in the district court pursuant to Rule 65 or 66 of the Colorado Rules of Civil Procedure for abatement under this article. These actions may request:
(1) An injunction ordering the owner of property to take whatever action the court considers necessary or appropriate to abate the violation;
(2) The appointment of a receiver to take possession and control of the property and to complete all work and to furnish material that reasonably may be required to abate the violation. All interested persons must be made parties to the action. [Emphasis added.]
(3) The court to appoint a receiver to exercise any of the powers listed below:
(A) Take possession and control of the property, operate and manage the property, establish and collect rents and income, lease and rent the property, and evict tenants. An existing violation of the Denver Building or Denver Housing Codes does not restrict the receiver's authority pursuant to this subsection.
(B) Pay all expenses of operating and conserving the property including the cost of electricity, gas, water,
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sewerage, heating fuel, repairs and supplies, custodian services, taxes, assessments, and insurance premiums and to hire and pay reasonable compensation to a managing agent.
(C) Pay pre-receivership mortgages and other liens and installments of pre-receivership mortgages and other liens.
(D) Perform or enter into contracts for the performance of work and the furnishing of materials necessary to abate the violations and obtain financing for the abatement of violations.
(E) Pursuant to court order, remove and dispose of personal property that is abandoned, stored, or otherwise located on the property, that creates a dangerous or unsafe condition, or that constitutes a violation of the Code, including the Denver Building, Denver Housing, and Denver Zoning Codes.
(F) Enter into agreements and take actions necessary to maintain and preserve the property and to comply with the Code, including the Denver Building, Denver Housing, and Denver Zoning Codes.
(G) Give the custody of the property and the opportunity to abate the violation and operate the property to the owner or to a mortgagee or lienholder of record.
(H) Issue notes and secure the notes by deeds of trust on the property on terms, conditions, and at interest rates all as approved by the court. [Emphasis added.]
(I) Obtain mortgage insurance for a receiver's mortgage.
(J) Any other action that the court considers appropriate.
(4) That all costs, including the costs of the receivership, expenses, penalties, and all fees, be assessed against the owner and made a lien against the property, taking precedence over and being superior to all other liens of record except liens for general taxes and special assessments.
(5) That, at the request of the party that applied for the receivership, the court discharge the receiver.
(6) That if repair and rehabilitation of the property are not found to be feasible, upon the written request of all known interested persons who have appeared in the action, to have the property or
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portions of the property demolished, the court order the demolition of all or part of the property. The court may require the receiver to determine the cost of demolition of the property or the portions of the property that constitute the violation, and after court approval, the receiver shall arrange for demolition in accordance with state laws, the Code (including the Denver Building Code and Chapter 30 Landmark Preservation), and any permit issued under these authorities. However, demolition must not be ordered unless the requesting persons have guaranteed or underwritten the costs of demolition, have paid the costs of the receivership, and have paid all notes and mortgages of the receivership. Nothing in this article or a court order arising out of a court action authorized under this section limits the city's right to demolish any property that the city is authorized to demolish pursuant to the provisions of the Denver Building Code.
(7) Nothing in this article limits or prohibits the city from exercising or using other remedies or procedures to enforce this article, the Denver Building, Fire, Housing, or Zoning Codes.
C.R.C.P. 66
Colorado Rule of Civil Procedure 66 governs the appointment of a receiver by the Court. The Court may appoint a receiver before judgment on the application of a party when that party establishes an interest in property that is subject to the action and which is in danger of being materially injured or impaired. This Rule can and should be interpreted to include properties that are unsafe according to the Denver Municipal Code. C.R.C.P. Rule 66(a)(1) reads in pertinent part as follows:
A receiver may be appointed by the court in which the action is pending at any time:
(2) By or after judgment, to dispose of the property according to the judgment, or to preserve it during appellate proceedings; or
. . .
(3) In other cases where proper and in accordance with the established principles of equity.
C.R.S. § 7-80-812(2) also provides that a Court “may appoint an individual authorized to do business in the state as a receiver or custodian” for a limited partnership.
The appointment of a receiver is a matter left to the discretion of the court, and is appropriate when the moving party can make a prima facie showing that:
a. He has a right or interest in the property;
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b. The property is in the possession of the adverse party; and
c. The property or its value is in danger.
E.g., Rigel v. Caveny, 133 Colo. 556, 559 (Colo. 1956); GE Life and Annuity v. Ft. Collins Assemblage, Ltd., 53 P.3d 703, 704-705 (Colo.App. 2002); Diaz v. Fernandez, 910 P.2d 96, 97 (Colo.App. 1995). In Diaz, the court found that the claimant who owned 49% of a limited liability company could seek to have a receiver established, even when he did not also ask for dissolution of the company.
The appointment of a receiver has been found appropriate when necessary for the continued operation of a company. Eureka Coal Company v. McGowan, 72 Colo. 402, 404 (Colo. 1922).
There is very little reported case law in Colorado discussing the appointment of an equitable receiver, however, cases interpreting Fed.R.Civ.P. Rule 66 are ample.1 See, Matter of McGaughey, 24 F.3d 904, 907 (7th Cir. 1994) (federal courts have inherent equitable power to appoint receivers to manage a defendants’ assets during pendency of litigation).
It is hornbook law that where assets are abandoned, the Court may appoint a receiver to take the property into the custody of the Court. 3 Ralph Ewing Clark, Clark on Receivers § 747(d) (3d. Ed. 1959). Toole-Tietze and Co. v. Colorado River Development Co., 38 F.2d 850 (S.D.Cal. 1930) (abandonment of property basis for appointing receiver); Masterson v. Cavin, 178 S.W.2d 662 (Tex. App. 1915) (same). This is obviously so the property will be preserved and distributed properly. Although an argument could be made that the Property have not been abandoned, but are instead being operated as neglected and derelict, that would still bring the Property squarely within the scope of the Neglected and Derelict Buildings Code.
Further, authorities are clear that a receiver can be appointed where a building presents a danger to the public health and safety. This is particularly true in instances, such as in the case here, where transient residents are squatting in the building.
The action by the Court appointing a receiver may be made on the papers alone. Rule 66, C.R.C.P., does not require the Court to hold a hearing. The Court may
1 Fed.R.Civ.P. Rule 66 reads as follows:
Rule 66. Receivers
These rules govern an action in which the appointment of a receiver is
sought or a receiver sues or is sued. But the practice in administering an
estate by a receiver or a similar court-appointed officer must accord with the
historical practice in federal courts or with a local rule. An action in which a
receiver has been appointed may be dismissed only by court order.
USCS Fed Rules Civ Proc R 66
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approve of the appointment of a receiver without a hearing where the record discloses sufficient facts to warrant it. Citronelle-Mobile Gather, Inc. v. Watkins, 934 F.2d 1180, 1189 (11th Cir. 1991). See, Hanssen v. Pusey &Jones Co., 276 F. 296, 298 (D.Del. 1921) (“In granting temporary relief by the appointment of a receiver . . . courts merely recognize that a sufficient case has been made out to warrant the judicial preservation of the rights or property in controversy for the benefits of all parties in interest, until a hearing upon the merits shall have been had.”)
THE PROPOSED RECEIVER
The Plaintiff proposes Sterling Consulting Corporation, Richard A. Block, President (“Sterling”). Mr. Block and his companies have significant experience in management of distressed companies and assets, generally, and receiverships in particular. Sterling Consulting Corporation, Waverton Group, LLC (a wholly owned subsidiary of Sterling), and Mr. Block have been the Court-appointed receiver in numerous cases, including without limitation: an action styled Jump, et al. v. United Memorial Service Corp., Case No. 90 CV 6368, District Court, City and County of Denver (a licensed preneed funeral company regulated by the Colorado Division of Insurance, successfully resolved), in the case of In re Indian Motorcycle Manufacturing, Inc., U.S. District Court, District of Denver, Case No. 95-Z-777 (a national motorcycle company successfully resolved), in the action styled FirstBank Holding Company of Colorado and Alpine Bank v. Town of Kiowa, Colorado and Town
of Kiowa, Colorado Water Activity Enterprise, District Court, Elbert County, Colorado, Civil Action No. 2012 CV 43 (as receiver over the water and sewer activity enterprise of the Town of Kiowa, Colorado, successfully resolved), and in the action styled State of Colorado, ex rel. John W. Suthers, Attorney General v. Colorado Humane Society &
S.P.C.A., Inc., Mary C. Warren, et al., Civil Action No. 2008 CV 2659, District Court for the County of Arapahoe, State of Colorado (appointed at the request of the Colorado Attorney General, successfully resolved), and in the action brought under the same City vacant and derelict building ordinance as this matter styled as City and County of Denver, a municipal corporation of the State of Colorado v. Tele Comm Resources,
Limited Partnership, a Nevada limited Partnership, Civil Action No. 2015CV30918, District Court, City and County of Denver, Colorado. A resume of the Receiver together with the proposed Fee Schedule and Expense Reimbursement Policies is attached hereto as Exhibit “1”. Sterling Consulting Corporation is prepared to take the Oath of Receiver submitted herewith and prepared to post a receiver’s bond in an amount to be determined by the Court, should the Court determine that a bond is necessary.
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WHEREFORE, the City and County of Denver prays that this Court appoint Sterling Consulting Corporation, Richard A. Block, President as receiver, and grant it such other and further relief as the Court deems just and proper.
Respectfully submitted this 7th day of June, 2016.
Attorney for Plaintiff:
MACHOL & JOHANNES, LLC
700 17th Street, Suite 200
Denver, CO 80202-3502
(303) 830-0075 Fax (303) 830-
Original duly signed and on file for review
By: s/ Jacques A. Machol, III Jacques A. Machol, III, #8382 Attorney for Plaintiff City and County of Denver
CERTIFICATE OF E-SERVICE
The undersigned certifies that a copy of the foregoing PLAINTIFF CITY AND
COUNTY OF DENVER’S MOTION TO APPOINT A RECEIVER was E-served via ICCES this 7th day of June, 2016, and served upon the following:
Via ICCES to: Howard J. Beck, Esq. Beck, Payne, Frank & Piper, P.C. 3025 South Parker Road, Suite 200 Aurora, Colorado 80014
By: /s/Michele Imes
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Sterling won styled Jction No. 9
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– 1986). Se Pines Gous Castle assisted C
and financn a dispute
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ATION (R
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– 1985). Ds largest Rthe proper
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any. At the subsidiaparent comparent com
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he time Stery was thr
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Law, 197
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RENCES
Referencesg as receiv
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DATE FILED: June 7, 2016 5:17 PM FILING ID: F0DC4AA9E5619 CASE NUMBER: 2016CV32061
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DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO Court Address: 1437 Bannock St, Room 256, Denver CO 80202 Phone Number: 720/865-8301
Plaintiff: CITY AND COUNTY OF DENVER, a municipal corporation of the State of Colorado v. Defendant: NICK RINO ▲ COURT USE ONLY ▲
Attorney for Plaintiff Jacques A. Machol, III, #8382 MACHOL & JOHANNES, LLC 700 17th Street, Suite 200 Denver, CO 80202-3502 (303) 830-0075 Fax (303) 830-0047
Case No. Division: Ctrm.:
ORDER APPOINTING RECEIVER
This matter has come before the Court this day of June, 2016, on the Verified Complaint (“Complaint”) and the Motion for Appointment of Receiver (“Motion”) filed by Plaintiff with respect to the Property. The term “Property” is defined in Exhibit A attached to this Order.
Having examined the Complaint, the Motion, and the accompanying materials submitted by Plaintiff, the Court is now fully advised in the premises.
THE COURT HEREBY FINDS THAT:
A. The Court has jurisdiction over the subject matter.
B. Venue is proper pursuant to C.R.C.P. 98(a) and (c).
C. The allegations set forth in the Motion and Complaint are true. The Motion and Complaint establish the Plaintiff’s right to the appointment of a Receiver and the relief requested.
DATE FILED: June 7, 2016 5:17 PM FILING ID: F0DC4AA9E5619 CASE NUMBER: 2016CV32061
2
D. The Court has reviewed the exhibits submitted with the Complaint, and finds that the Plaintiff has established an interest in the Property.
E. The Property, revenues, income, issues, and profits derived from the Property, are in danger of being materially injured, impaired, reduced in value, or lost.
F. Any transfer of all or part of the Property will operate to diminish the rights of the Plaintiff.
G. The appointment of a receiver for the Property is reasonable and necessary for the protection of the Property and the rights of the parties in this case. Based on the standards set forth in Rules 65 and 66, C.R.C.P., and case law thereunder, and based on legal and factual arguments of the Plaintiff and other parties, as set forth in the Motion, the Plaintiff is entitled to entry of this Order.
H. The Plaintiff has demonstrated a reasonable probability of success on the merits, there is no plain, speedy, and adequate remedy at law, the appointment of a receiver will not disserve the public interest, the balance of the equities favors the appointment of a receiver and the appointment of a receiver will preserve the assets of the estate pending any trial on the merits.
I. Sterling Consulting Corporation, whose business address is 4101 East Louisiana Avenue, Suite 300, Denver, Colorado, 80246, is a suitable entity to be appointed as receiver for the Property.
IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED THAT:
1. Sterling Consulting Corporation is appointed as receiver (the “Receiver”) for the Property and is hereby directed and empowered to take immediate control of the Property and operate the Property on the Court’s behalf in custodia legis. The Receiver shall manage, operate, and protect the Property subject to the supervision and exclusive control of this Court.
2. The Receiver shall have all the powers and authority usually held by receivers and reasonably necessary to accomplish the purposes herein stated including, but not limited to, the following powers and duties, which may be exercised without further Order of the Court:
3
a. All of the powers enumerated in Article IX. – Neglected and Derelict Buildings, § 10-138 through § 10-143 (Court Actions for Abatement) of the Ordinances of the City of Denver, Colorado (the “Neglected Buildings Sections” of the “Code”), particularly § 10-140 of the Neglected Buildings Sections of the Code.
b. To hire and retain and otherwise obtain the advice and assistance of such legal counsel, accounting, property management, and other professionals as may be necessary to the proper discharge of the Receiver’s duties, with all reasonable expenses incurred in connection therewith deemed to be expenses of the Receivership Estate, and to pay such professionals from the rents, revenues, and proceeds of the Property without further application to, or Order of the Court;
c. To manage, operate, maintain, repair, and otherwise control the Property as necessary to prevent diminution of its value at the level the Receiver reasonably deems appropriate, which may be at a limited service level or may include the suspension of operations altogether which shall include the following: to exercise all of Defendants’ rights and remedies with respect to proceedings brought to collect any accounts related to the Property, to open, transfer, and change all bank accounts, trade accounts, and merchant accounts wherever located containing funds associated with the Property, and deposit all sums received by the Receiver in a financial institution insured by the federal government in the name of the Receiver; to write checks and make withdrawals on such accounts; contract for and obtain such services, utilities, supplies, equipment and goods as are reasonably necessary to operate, preserve, and protect the Property; to reject any leases, agreements, or unexpired contracts of Defendant connected to the Property that are a burden on the Property; to obtain, renew, and terminate all insurance policies for the protection of the Property and for the protection of the interest of the Receiver and the parties to this action with respect to Property; provided, however, no contract executed by the Receiver shall extend beyond the termination of the Receivership unless authorized by the Court;
d. To change any or all locks on any Property;
e. To conduct a full inventory of all Personal Property;
f. To invest funds of the Receivership Estate, without further permission of the Court, in savings accounts or in securities backed by the full faith and credit of the United States;
4
g. To account to this Court for all sums received and expenditures made and file periodic receiver’s reports to this Court from time to time, not less than every three months;
h. During the term of the Receivership Action, the Receiver may issue Receiver’s Certificates to parties to this Receivership Action and to third parties in exchange for funds to pay for the fees, costs, and expenses of the Receivership Estate with the approval of this Court. Receiver’s Certificates shall bear interest and shall be a preference claim upon the Properties. Without intending to limit the generality of the foregoing, the receiver has arranged to borrow up to $100,000 from a third party at 12% simple interest on the outstanding balance. The receiver may issue a Receiver’s Certificate secured by the Property in exchange therefor provided that the receiver offers the Plaintiff and the Defendant herein ten (10) days to provide, or arrange, the financing under better terms and conditions;
i. To apply for, obtain, renew and, as necessary, to prevent the loss of all trademarks, copyrights, patents, licenses, permits and entitlements required for the preservation or operation of the Property or issued in connection with therewith;
j. To settle any claims against the Property with the approval of this Court;
k. To notify any and all insurers under insurance policies affecting the Property of the pendency of these proceedings and that, subject to the prior rights of any party holding a lien encumbering the Property, any proceeds paid under any such insurance policies shall be paid to the Receiver until such time as the said insurance carriers are advised to the contrary by this Court or until they receive a certificate issued by the Clerk of this Court evidencing the dismissal of this action; and
l. To preserve and protect the improvements located on the Property, and to secure same against loss and damage, and to preserve any and all construction claims and warranties as necessary.
3. The Receiver is hereby authorized to apply the rents, revenues, income, issues, and profits collected by the Receiver in connection with the management and operation of the Property: first, to the Receiver’s compensation as identified in paragraph 4 below; second, to pay the Receiver’s attorney fees; third, to repay the other out-of-pocket expenses incurred by the Receiver in connection with the receivership; fourth, to repay all sums borrowed by the Receiver as evidenced by Receiver’s Certificates;
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fifth, to pay the costs of preserving and repairing the Property; sixth, to pay the other costs and expenses of the receivership, including but not limited to payment of real and personal property taxes (including fees, penalties, fines, and other assessments pursuant to Article IX of the Code – Neglected And Derelict Buildings), insurance, water and sanitation bills, utilities and other operating expenses; seventh, whenever sufficient funds are available for such purpose, the Receiver shall make principal and interest payments toward any loans that are secured by a lien on the Property in the order of their priority, and eighth, to a fund to be held by the Receiver, pending further order of this Court. This fund may be in an interest-bearing account, at the discretion of the Receiver, provided such account shall be protected by the full faith and credit of the United States.
4. On a monthly basis, to pay for its services as Receiver and its staff at the following hourly rates: $300.00 per hour for principals of Sterling for the first ten hours of each month; $200.00 per hour for the second ten hours of each month, and $150.00 per hour for all additional hours of each month. The Receiver’s compensation for the services of its financial officer shall be $75.00 per hour and associates shall be compensated at $55.00 per hour. The Receiver shall submit its invoices to the Court for approval within 10 days after the 20th of each calendar month for services from the 21st of the previous month through the 20th of the current month. The Receiver shall pay 80% of the invoice as submitted and reserve 20% subject to Court approval of the invoice. The reserved 20% shall be paid with the invoice for the following month unless there is an objection to the amount filed with the Court.
5. Within five (5) Court days of the date of this Order, the Receiver shall execute and file an Oath of Receiver with this Court accepting the appointment and agreeing to fully and faithfully exercise all powers and discharges under this Order, any subsequent directives of this Court, and applicable law.
6. Pursuant to §10-140(a)(4) of the Neglected Buildings Sections of the Code, all costs, including the costs of the receivership, expenses, penalties, and all fees, be assessed against the owner and made a lien against the Property, taking precedence over and being superior to all other liens of record except liens for general taxes and special assessments.
7. If the Receiver confirms that the condition of the Property remains a violation of the Neglected Buildings Sections of the Code and if the Receiver determines that repair and rehabilitation of the Property are not feasible, upon application to this Court and written notice to all known
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Interested Persons to have the Property or portions of the Property demolished, the Court may Order the demolition of all or part of the Property. In such event, the Receiver shall determine the cost of demolition of the Property or the portions of the Property that constitute the violation, and after Court approval, the receiver shall arrange for demolition in accordance with the laws of the State of Colorado, the Code, and obtain any permit required under these authorities.
8. The Receiver shall not be required to post a receiver’s bond.
9. The Receiver shall be entitled to immediate possession, custody, and control of the Property of the Receivership Estate, subject to the following:
a. The Receiver shall give written notice of this action and provide a copy of this Order to Defendant, to any Interested Person, and to any persons in possession of the Property pursuant to C.R.C.P. 66(d)(3),
b. All parties in are Ordered to turn over immediately to the Receiver any Property in their possession, custody, or control.
c. With respect to any items required to be turned over to the Receiver under this Order, the Receiver may, in the Receiver’s sole discretion, accept photocopies of such documents accompanied, in each case, by the certification of the person delivering the copy that such document is a true, correct, and complete copy of the original. In such event, the Receiver shall have the right at any reasonable time, on reasonable notice, to inspect the originals of such documents.
10. Except as may be expressly authorized by this Court after notice and hearing, Defendant and his agents, employees, and agents are enjoined from:
a. Collecting any revenues from the entities or related to the Property, or withdrawing funds from any bank or other depository Account relating to the entities or the Property;
b. Terminating, or causing to be terminated, any license, permit, lease, franchise agreement, contract, or agreement relating to the entities or the operation of any of the businesses on such property; and
c. Otherwise interfering with the operation of the Properties or the Receiver’s discharge of its duties hereunder.
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11. All owners of real and personal property leased or rented to the Defendants for the benefit of the Property are hereby enjoined, for a period not to exceed ninety (90) days from entry of this Order, from seizing, or preventing the Receiver from taking possession of the leased or rented property except with the approval of this Court. Delivery of a copy of this Order to any such owner shall serve as formal notice of this Order and the owner’s obligations under this paragraph.
12. Defendant or anyone else in possession of records related to the Property shall respond in a timely fashion to requests and inquires of the Receiver concerning such records, record keeping protocols, filing systems, information sources, passwords, algorithms and processes used to manipulate data, and similar matters. With respect to any information or records stored in computer-readable form or located on computers of Defendant or the person in possession of the records, such person shall provide the Receiver full access to all media on which such records are located and all computers and the necessary application, system, password, and other software and information necessary to review, understand, print, and otherwise deal with such computerized records.
13. Any debts, liabilities, or obligations incurred by the Receiver in the course of this receivership, including the operation or management of the Property, whether in the name of the Receiver, the Property, or the Receivership Estate, shall be the debt, liability, and obligation of the Receivership Estate only and not of the Receiver or any employee or agent personally.
14. By making this request for the appointment of a receiver, Plaintiff does not render itself liable for the costs and expenses of the Receivership Estate, nor is Plaintiff required to advance funds to the Receiver to meet the capital needs of the Receivership Estate.
15. This Order Appointing Receiver is only for the Property specified herein. This Receiver is not appointed for the Defendant. As a result, the receiver need not complete tax returns on behalf of the Defendant.
16. In the event there are insufficient funds to repay any Receivership expenses as contemplated above, the Receiver’s unpaid compensation and unpaid expenses shall have a lien encumbering the Property having a priority senior to that of any Receiver’s Certificate or Deed of Trust. The Receiver or holder of any unpaid and past-due Receiver’s Certificate are hereby authorized to execute and record in the Clerk and Recorder’s Office for any county in which the real property is located
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Certificates of Lien putting third-parties on notice of such liens. Any such lien may be released of record by a Certificate of Release of Lien executed by the Receiver and recorded in the county where such Certificate of Lien was previously recorded. The Receiver or holder of any unpaid and past-due Receiver’s Certificate are shall be entitled to all costs and expenses associated with enforcing such lien and such amount shall be secured by such lien.
17. Except as may be expressly authorized by the Receiver or approved by this Court, no person may buy, sell, or otherwise transfer any Property in the control of the Receiver.
18. Sheriff’s assistance to enforce the terms of this Order in the form of peace-keeping duties is hereby authorized.
19. All actions that seek equitable, in rem, direct, or indirect relief against the Property, Receiver, or the Receivership Estate are hereby stayed. Without limiting the generality of the foregoing, this Order also expressly stays any pending or future administrative, foreclosure, and other actions, the remedy for which is a penalty, lien, taking, or other impairment against the Property absent express permission of this Court. Any party desiring such relief must bring that request by motion in the matter.
20. All who are acting, or have acted, on behalf of the Receiver at the request of the Receiver, are protected and privileged with the same immunities and protections of this Court as the Receiver has.
21. The Receiver shall serve notice of any request for relief or approval of any action on every party filing an entry of appearance in this proceeding and on every person known to be an Interested Person as defined in § 10-138 of the Neglected Buildings Sections of the Code.
22. Court approval of any motion or requests for authorization filed by the Receiver, shall deemed granted unless opposed within ten (10) business days after the service by the Receiver of written notice of such request upon anyone entering an appearance in this action. The Receiver shall reply within three (3) business days.
23. In the event that a bankruptcy case is filed by or against Defendant or any other person that would result in an Automatic Stay applicable to the Property during the pendency of this Receivership, the Defendant (the “Debtor”) must give notice of the same to this Court, to all parties, and to the Receiver, within 24 hours of the filing of the bankruptcy
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petition. Upon receipt of notice that a bankruptcy has been filed that includes as part of the Bankruptcy Estate any Property which is the subject of this Order, the Receiver shall do the following:
a. The Receiver shall immediately contact the Debtor to discuss whether the Receiver should, in the exercise of the Receiver’s sound discretion, move in the Bankruptcy Court for an Order for relief from the Receiver’s obligation to turn over the property (11 U.S.C. § 543) or for relief from the Automatic Stay, in whole or in part (11 USCS § 362).
b. If, in the exercise of the Receiver’s sound discretion, the Receiver decides not to make such a motion, then the Receiver shall immediately turn over the property of the Receivership Estate to either the trustee in bankruptcy, if one has been appointed, or if not, then to the Debtor, and otherwise comply with U.S.C. § 543.
c. If, in the exercise of the Receiver’s sound discretion, the Receiver decides to seek relief from the Receiver’s obligation to turn over the Property or relief from the Automatic Stay, then the Receiver is authorized to remain in possession and preserve the property pending the outcome of such motion (11 U.S.C. § 543(a)).
d. If, in the exercise of the Receiver’s sound discretion, the Receiver determines that a Trustee or Examiner (11 USCS § 1104) is appropriate or necessary to protect the Property in a bankruptcy case, then the Receiver is authorized to file such a motion with the Bankruptcy Court containing a detailed explanation of the reasons therefor, with notice of the motion and copy of the motion in this Court.
e. Notwithstanding the above, if the Receiver fails to file a motion within ten (10) court days after their receipt of notice of the filing of the bankruptcy petition, then the Receiver shall immediately turn over the property of the Debtor either to the trustee in bankruptcy if one has been appointed or, if not, to the debtor in the possession, and otherwise comply with 11 U.S.C. § 543.
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f. The Receiver is authorized to retain legal counsel to assist the Receiver with the bankruptcy proceedings.
DONE this day of , 2016.
BY: District Court Judge
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EXHIBIT A
The “Property” shall be comprised of all of the real property related to the following real property (the “Real Property”):
3351 West Center Avenue, Denver CO, 80219; Schedule No. 0517222017000; Legal Description: Lots 34 and 35, Block 18, ADAMS PARK ANNEX, City and County of Denver, State of Colorado (the “Property”).
The Property shall also be comprised of all personal property, including all tangible and intangible property, owned by the Defendant and necessary to the operation of the Real Property, wherever such personal property is located (the “Personal Property”), as described below:
1. All financial assets related to the Property, including all revenues and income related to, or derived from, the Property, securities, checks, drafts, notes, certificates, deposits, rent payments, lease payments, revenues, royalties, income, issues, profits, insurance payments, condemnation awards, rent rolls.
2. All documents, books, records, and information related to the Real Property and the improvement of the Real Property, including development and construction plans and specifications, contractor lists, leases, blueprints, building permits, property entitlements, soil reports, engineering reports, inspection reports, contracts to which Defendants are a party.
3. All accounts receivable and payable, notes payable, books of account, receipts, checkbooks, tax returns, certificates of deposits, escrowed funds and deposits, bank accounts, operating accounts, merchant accounts, security deposits, security deposits, payment intangibles, letter-of-credit rights (as such terms are defined in the UCC), and financial instruments. All such accounts shall be referred to as “Accounts.”
4. All tangible property related to the Property including equipment, inventory, appliances, software, computers and computer equipment, office equipment, furniture, furnishings, fixtures, inventory, construction materials, motor vehicles, supplies, investment property, books and records, chattel paper all accessories, attachments, parts, equipment, and repairs now or hereafter attached or affixed to or used in connection with any tangible property whether now owned or hereafter acquired.
5. All documents and other financial records relating to the Property including correspondence to, from or referring to, insurance policies, certificates and licenses, franchise agreements contracts to which Defendants are a party, rights, claims or chose in action of Defendants, general intangibles, whether in documentary or electronic form.
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6. With respect to any records or information existing in computer memory or other electronic medium, such information shall be deemed to include the medium on which such information is stored and appropriate software and hardware to access such information.