Kaura v. Stabilis Fund II, LLC

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Stabilis Fund II, LLC (Stabilis) held a trust deed on an apartment complex in Indio. In 2013, Stabilis sued the owners of the property, alleging that the underlying loan was in default, seeking judicial foreclosure, and, in the interim, seeking a receiver “to make sure that the Real Property is properly maintained and that property conditions do not pose a risk of harm to tenants and third parties.” On Stabilis’s motion, the trial court appointed a receiver. In 2014, the City of Indio (City) intervened, alleging the property was a public nuisance, riddled with hazardous and substandard conditions in violation of state and local law. It moved to modify the receivership by instructing the receiver to remedy these conditions. Stabilis did not argue that the City was not entitled to the requested modification; however, it did argue that the motion was premature, that the receiver already had the necessary powers, and that it should be allowed to proceed with foreclosure. The trial court nevertheless granted the motion. The City then moved for an award of its attorney fees and expenses. The trial court granted the motion; it awarded the City $98,190.47, to be paid out of the receivership estate, if there were sufficient funds, and if not, then by Stabilis. Stabilis appealed, arguing that it was only the lender: if anyone was liable for attorney fees and expenses, it should have been the owners. More specifically, it argued that none of the three statutes cited by the City authorized the trial court’s award of attorney fees and expenses against it under the circumstances of this case. The Court of Appeal agreed, and reversed. View "Kaura v. Stabilis Fund II, LLC" on Justia Law