Petition for Writ of Certiorari — The Sunshine Group, LLC, Petitioner v. City of Dana Point, California, et al.
Supreme Court briefOct 2, 2025
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No. _______
IN THE
Supreme Court of the United States
The Sunshine Group, LLC,
v.
Petitioner,
City of Dana Point, California
And Mark Samuel Adams,
Respondents.
On Petition for a Writ of Certiorari to the
Court of Appeal of the State of California
Fourth Appellate District, Division Three
PETITION FOR A WRIT OF CERTIORARI
Michael M. Berger*
Richard A. McDonald
*Counsel of Record
Stoner Carlson LLP
MANATT, PHELPS & PHILLIPS
301 E. Colorado Blvd.
2049 Century Park East
Suite 320
Suite 1700
Pasadena, CA 91101
Los Angeles, CA 90067
(626) 356-4801
(310) 312-4000
mmberger@manatt.com
Counsel for Petitioner
-i-
QUESTIONS PRESENTED
The City of Dana Point “red tagged” Petitioner’s
motel and then had a receiver appointed to oversee
its rehabilitation without ever providing notice of
the hearing. Thereafter, it set the property for a
foreclosure sale. It did all of this by means of
“ex parte” proceedings that provided no formal
notice or hearing. That raises serious due process
issues, both procedural and substantive, as well as
a taking of property without just compensation.
Question 1: When government acts without
notice in a way that seriously impacts the rights of
citizens, does the lack of constitutionally required
notice deprive the victim of property without due
process of law?
Question 2: Is it finally time to rein in
California’s practice of ignoring this Court’s line of
regulatory takings decisions, based on Penn Central
Transportation Co. v. City of New York, 438 U.S.
104 (1978) and Lucas v. South Carolina Coastal
Council 505 U.S. 1003 (1992), while charting its
own more restrictive course on this federal
constitutional issue for which this Court’s decisions
provide a floor?
- ii PARTIES TO THE PROCEEDING
Petitioner Sunshine Group, LLC was the owner
of the property that is the subject of this litigation
at the time of the critical events described herein.
The Sunshine Group LLC is a California limited
liability corporation located in San Marino, CA. It
is owned by these members of the Manchanda
family: Dr. Ramesh Manchanda, Prabhat
Manchanda, Rahul Manchanda, and Rohit
Manchanda. Dr. Ramesh Manchanda is the
managing member. There are no corporate owners
or subsidiaries involved.
The City of Dana Point, California, is a
California municipal corporation.
Mark Samuel Adams is an individual who was
appointed on motion of the City to serve as receiver
for the subject property.
RELATED CASES
City of Dana Point v. The Sunshine Group, LLC,
Orange Superior Court no. 30-2017-00915900-CUPT-CJC., Judgment entered June 13, 2023.
City of Dana Point v. The Sunshine Group, LLC,
California Court of Appeal, Fourth District,
Division Three, Nos. G062484, G062828. Opinion
filed April 21, 2025.
City of Dana Point v. The Sunshine Group, LLC,
California Supreme Court No. S291187, Order
entered July 9, 2025.
- iii TABLE OF CONTENTS
APPENDIX .............................................................. vi
PETITION FOR A WRIT OF CERTIORARI ........ 1
INTRODUCTION .................................................... 1
OPINIONS BELOW ................................................ 3
JURISDICTION ....................................................... 3
CONSTITUTIONAL PROVISIONS INVOLVED 3
STATEMENT OF THE CASE ................................ 4
A.
Sunshine Owns a Motel
in Dana Point. As the
Buildings Dated From
the 1940s and were in
Disrepair, Sunshine
Planned to Demolish
and Replace them. .................. 4
B.
Dana Point Decides to
“Red Tag” the Property
and Appoint a Receiver
to Effect Repairs but
Violates Constitutional
Standards Regarding
Notice to the Property
Owner. ..................................... 4
C.
The City and Receiver
Insist that the Property
is “Historic” and Cost
Estimates for Repair
Skyrocket................................. 5
- iv D.
The Trial Court Took
Sunshine’s Property Without
Due Process by Approving the
ex parte Process Adopted by
the City and the
Receiver……………………….6
E.
The Appellate Courts Upheld
the Trial Court’s
Unconstitutional
Actions…………………….….7
REASONS FOR GRANTING CERTIORARI ........ 7
I. Government Action Done Without Notice
Denies Due Process, Is Void, And Is
Subject To Attack At Any Time. ............ 7
A.
Notice Is Key To Due
Process. .................................... 7
B.
The City’s Failure To
Provide Notice Made Its
Actions Void And
Subject To Attack ................... 8
II. The California Courts Ignored Sunshine’s
Takings Claim in Conflict With This
Court Settled Precepts............................ 9
III. The Court Should Grant Certiorari To
Ensure That The Constitution Prevails
Over Statutes......................................... 12
A.
The Constitution is
paramount. ............................ 14
-vB.
The Just Compensation
Clause is a
Constitutional
Guarantee that This
Court has held to be
both Self-Executing and
Irrevocable. It Does Not
Depend Upon
Legislative Grace. ................. 18
CONCLUSION ....................................................... 21
- vi APPENDIX
APPENDIX A — OPINION OF THE
COURT OF APPEAL OF CALIFORNIA,
FOURTH APPELLATE DISTRICT,
DIVISION THREE, FILED APRIL
21, 2025…………………………………….........1a
APPENDIX B — JUDGMENT OF THE
SUPERIOR COURT OF CALIFORNIA
FOR THE COUNTY OF ORANGE,
FILED JUNE 13,
2023……………….…………………..………...40a
APPENDIX C — CALIFORNIA SUPREME
COURT ORDER, FILED JULY 9,
2025…….…………………..……………….…..43a
- vii TABLE OF AUTHORITIES
CASES
Agins v. City of Tiburon,
447 U.S. 255 (1981) ......................................... 2, 9
American Legion v. American Humanist Assn.,
139 S.Ct. 2067 (2019) (Kavanaugh, J.,
concurring) ......................................................... 12
Arkansas Game & Fish Comm'n v. United States,
568 U.S. 23 (2012) ............................................. 20
Board of Regents v. Roth,
408 U.S. 564 (1972) ............................................. 8
Bracy v. Gramley,
520 U.S. 899 (1997) ........................................... 13
Brown-Forman Distillers Corp. v. New York
State Liquor Auth.,
476 U.S. 573 (1986) ........................................... 21
Cedar Point Nursery v. Hasid,
141 S.Ct. 2063 (2021) ................................ 1, 2, 11
City of Monterey v. Del Monte Dunes,
526 U.S. 687 (1999) ....................................... 2, 12
Dolan v. City of Tigard,
512 U.S. 374 (1994) ........................................... 11
Elliott v. Peirsol’s Lessee,
26 U.S. 328 (1828) ............................................... 9
First English Evangelical Lutheran Church
v. County of Los Angeles,
482 U.S. 304 (1987) ....................... 1, 2, 11, 19, 20
Hodel v. Irving,
481 U.S. 704 (1987) ........................................... 11
- viii Horne v. Dept. of Agriculture,
576 U.S. 350 (2015) ........................................... 20
Jacobs v. United States,
290 U.S. 13 (1933) ....................................... 14, 18
Knick v. Township of Scott,
588 U.S. 180 (2019) ..................................... 19, 20
Lake Country Estates v. Tahoe Reg. Plan. Agency,
440 U.S. 391 (1979) ............................................. 2
Lucas v. South Carolina Coastal Council,
505 U.S. 1003 (1992) ................................. 2, 9, 10
Marbury v. Madison,
5 U.S. 137 (1803) ................................... 13, 14, 17
Maryland v. Louisiana,
451 U.S. 725 (1981) ........................................... 13
Mathews v. Eldridge,
424 U.S. 319 (1976) ............................................. 7
Monongahela Nav. Co. v. United States,
148 U.S. 312 (1893) ..................................... 18, 20
Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306 (1950) ......................................... 1, 7
Murr v. Wisconsin,
137 S.Ct. 1933 (2017) (Roberts, C.J.,
dissenting) .......................................................... 11
Mutual Pharmaceutical Co., Inc. v. Bartlett,
570 U.S. 472 (2013) ........................................... 13
Nollan v. California Coastal Commn.,
483 U.S. 825 (1987) ................................... 1, 2, 11
Olson v. United States,
292 U.S. 246 (1934) ........................................... 18
- ix Pakdel v. City & County of San Francisco,
141 S.Ct. 2226 (2021) .......................................... 2
Penn Central Transp. Co. v. City of New
York,
438 U.S. 104 (1978) ........................................... 11
Phelps v. United States,
274 U.S. 341 (1927) ..................................... 14, 16
San Diego Gas & Elec. Co. v. City of San
Diego,
450 U.S. 621 (1981) ................................. 2, 18, 19
San Remo Hotel, L.P. v. City and County of
San Francisco,
545 U.S. 323 (2005) ............................................. 2
Sheetz v. County of El Dorado,
601 U.S. 267 (2024) ......................................... 1, 2
Simmons v. South Carolina,
512 U.S. 154 (1994) ........................................... 12
Suitum v. Tahoe Reg. Plan Agency,
520 U.S. 725 (1997) ............................................. 2
Tahoe-Sierra Pres. Council, Inc. v. Tahoe
Reg’l Planning Agency,
535 U.S. 302 (2002) ............................................. 2
United States v. Dickinson,
331 U.S. 745 (1947) ........................................... 19
United States v. Jones,
565 U.S. 400 (2012) ........................................... 18
United Student Aid Funds, Inc. v. Espinosa,
559 U.S. 260 (2010) ............................................. 9
-xWest Virginia State Board of Education v.
Barnette,
319 U.S. 624 (1943) ..................................... 12, 17
Yee v. City of Escondido,
503 U.S. 519 (1992) ............................................. 2
CONSTITUTION
U.S. Const., art. VI, cl. 2 .................................. 13, 16
Fifth Amendment to the United States
Constitution .................... 3, 10, 16, 18, 19, 20, 21
Fourteenth Amendment To The United States
Constitution……………………………………..3, 7
STATUTES
28 U.S.C. § 1257(a) ................................................... 3
OTHER AUTHORITIES
Amar, Akhil Reed, Philadelphia Revisited:
Amending the Constitution Outside
Article V,
55 U. Chi. L. Rev. 1043 (1988) ......................... 13
Black’s Law Dictionary 1822 (3d ed.1933) ............. 8
Eng. Rep. 807 .......................................................... 18
Kanner, Gideon Just How Just is Just
Compensation?
48 Notre Dame L. Rev. 786 (1973) .................. 13
Restatement (Second) of Judgments 22
(1980) .................................................................... 9
-1PETITION FOR A WRIT OF CERTIORARI
Petitioner respectfully seeks a writ of certiorari
to review a judgment of the California Court of
Appeal, Fourth Appellate District, Division Three.
INTRODUCTION
The treatment meted out below to Petitioner
Sunshine
Group
demonstrates
California’s
continued refusal to adhere to constitutional
precepts laid down by this Court.
As the law of regulatory takings began to
develop, this Court had to repeatedly reprimand
California for ignoring both settled law and the
Constitution. See First English Evangelical
Lutheran Church v. County of Los Angeles, 482 U.S.
304, 310-11 (1987) (California decisions are
“inconsistent[] with the requirements of the Fifth
Amendment”); Nollan v. California Coastal
Commn., 483 U.S. 827, 839 (1987) (California
inconsistent with all other state courts and this
Court). From these early cases down through the
present-day decisions in Sheetz v. County of
El Dorado, 601 U.S. 267 (2024) and Cedar Point
Nursery v. Hasid, 141 S.Ct. 2063 (2021), California
has continued to require correction to bring it in
line with paramount federal constitutional law.
This case continues California’s cavalier
attitude toward the rights of its property-owning
citizens. It has denied due process of law in
manifold ways, including the deprivation of
property without notice (Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 313
(1950)) and continuing to impose its own truncated
-2view of regulatory takings law (Lucas v. South
Carolina Coastal Council, 505 U.S. 1003, 1015
(1992); Cedar Point Nursery v. Hassid, 141 S.Ct.
2063, 2071 (2021)). Each of these issues is
presented here for this Court’s review.
California has been occupying too much of this
Court’s limited schedule by its refusal to follow
settled precepts of federal constitutional law. The
following property rights cases are typical of the
arrogance displayed by California ― both its
regulatory agencies and its judiciary ― in
mistreating its property-owning citizens. See Lake
Country Estates v. Tahoe Reg. Plan. Agency, 440
U.S. 391 (1979); Agins v. City of Tiburon, 447 U.S.
255 (1981); San Diego Gas & Elec. Co. v. City of San
Diego, 450 U.S. 621 (1981); First English
Evangelical Lutheran Church v. County of Los
Angeles, 482 U.S. 304 (1987); Nollan v. California
Coastal Commn., 483 U.S. 825 (1987); Yee v. City of
Escondido, 503 U.S. 519 (1992); Suitum v. Tahoe
Reg. Plan Agency, 520 U.S. 725 (1997); City of
Monterey v. Del Monte Dunes, 526 U.S. 687 (1999);
Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l
Planning Agency, 535 U.S. 302 (2002); San Remo
Hotel, L.P. v. City and County of San Francisco, 545
U.S. 323 (2005); Pakdel v. City & County of San
Francisco, 141 S.Ct. 2226 (2021); Cedar Point
Nursery v. Hasid, 141 S.Ct. 2063 (2021); Sheetz v.
County of El Dorado, 601 U.S. 267 (2024).
It is time to call a definitive halt to California’s
unconstitutional attitude.
-3OPINIONS BELOW
The California Court of Appeal’s unpublished
opinion is reproduced at App. 1a. The California
Supreme Court’s unpublished Order denying
review is reproduced at App. 43a. The trial court’s
judgment and order dismissing the case is
reproduced at App. 40a. That neither of California’s
reviewing courts saw fit to publish its opinion
serves to accentuate California’s cavalier approach.
JURISDICTION
The California Court of Appeal filed its opinion
on April 21, 2025. A timely petition to the
California Supreme Court was denied on July 9,
2025. This Court has jurisdiction under 28 U.S.C.
§ 1257(a).
CONSTITUTIONAL
PROVISIONS INVOLVED
The Fifth Amendment to the United States
Constitution provides: “... nor shall private property
be taken for public use without just compensation.”
The Fourteenth Amendment to the United
States Constitution provides: “No State shall make
or enforce any law which shall abridge the
privileges or immunities of citizens of the United
States; nor shall any State deprive any person of
life, liberty, or property, without due process of law;
nor deny to any person within its jurisdiction the
equal protection of the laws.”
-4RAISING THE FEDERAL QUESTION
Petitioner raised its due process and takings
claims in its initial response to the City’s petition
and continued to raise them in each subsequent
pleading.
STATEMENT OF THE CASE
A.
Sunshine Owns a Motel in Dana Point.
Because the Buildings Dated From the
1940s and were in Disrepair, Sunshine
Planned to Demolish and Replace them.
The property in question sits on the California
coast. Since the 1940s, it had been improved with a
motel. Sunshine bought the property with the plan
to join it with neighboring properties to develop an
integrated hospitality facility. Given the age of the
facility and its general disrepair, Sunshine believed
that the prudent course would be to demolish and
replace it with a facility having larger rooms and
more amenities to make it more competitive with
its neighbors.
B.
Dana Point Decides to “Red Tag” the
Property and Appoint a Receiver to
Effect
Repairs
but
Violates
Constitutional
Standards
Regarding
Notice to the Property Owner.
The City evidently agreed with Sunshine about
the condition of the old motel, as it served Sunshine
with notices of multiple code violations and “red
tagged” the property as being dangerous to occupy.
Because Sunshine planned to demolish the old
building and replace it, it saw no need to engage in
-5expensive remediation. Instead, it applied for a
demolition permit.
Rather than deal with Sunshine’s application to
demolish and rebuild the facility, the City filed suit
to have a receiver appointed to take charge of the
repair work. However, instead of following the
constitutional process of notice and hearing, with
the presentation of evidence to justify such drastic
action, the City applied “ex parte” for the receiver’s
appointment and did so with only cursory notice.
The “notice” consisted of a brief informal letter that
said such action would be taken, but without any
information as to the date, time, or place of any
hearing. Thereafter, a similar ex parte process was
engaged to have the property sold at foreclosure
without notice or hearing.
C.
The City and Receiver Insist that the
Property is “Historic” and Cost Estimates
for Repair Skyrocket.
From the outset, the City and the Receiver
insisted that the property was “listed” on both state
and local registers of historic properties. Its petition
in the superior court so alleged and, indeed, it filed
a sworn statement from one of its employees to that
effect. That assertion was false, but the falsity
would not be revealed until years later.
Meanwhile, the erroneous “historic” label
caused the projected cost of the Receiver’s efforts to
skyrocket. From the Receiver’s initial estimate of no
more than $973,000 to complete the job, the
eventual cost soared to some $5 million. All of that
was charged to the property, setting it up for sale
on foreclosure. The radical cost increase was
-6attributable solely to the City’s and Receiver’s
wrongful insistence that the property needed to be
restored in a historic fashion.
D.
The Trial Court Took Sunshine’s
Property Without Due Process by
Approving the ex parte Process Adopted
by the City and the Receiver.
The day after filing its petition, the City applied
ex parte for the appointment of a receiver. It was in
this package that the City swore that the property
was listed as a historic resource on both the State
and City registries of historic resources.
The trial court granted the City’s ex parte
application and appointed Respondent Mark
Adams as receiver.
The Receiver represented that the cost to
remediate the property would be “no greater than”
$973,000. Sunshine agreed to underwrite that
expense, even though it believed that adding that
amount of debt to the property would render it
unable to compete in the local market.
Within months, the Receiver began to seek
additional funding, disregarding its initial
representation as being an upper limit. The total
amount eventually approved by the trial court was
$5,061,832 ― more than five times the original
estimate. Sunshine was not able to keep pace with
the Receiver’s soaring demands.
The Receiver obtained loans from outside
parties that eventually led to the property being
sold (via another ex parte order) on foreclosure.
-7Judgment was entered
followed by an appeal.
E.
against
Sunshine,
The Appellate Courts Upheld the Trial
Court’s Unconstitutional Actions.
The Court of Appeal affirmed (App. 1a) in an
opinion with manifold problems. In its brief
opinion, that court ignored the serious due process
and takings problems generated by the City, the
Receiver, and the trial court with no discussion at
all, even though those constitutional shortcomings
had been pointed out by Sunshine’s briefs.
Sunshine then filed a petition for review in the
California
Supreme
Court,
raising
the
constitutional issues brought here. That petition
was denied without opinion. (App. 43a.)
This Petition followed.
REASONS FOR GRANTING CERTIORARI
I.
Government Action Done Without Notice
Denies Due Process, Is Void, And Is Subject
To Attack At Any Time.
A.
Notice Is Key To Due Process.
“Procedural due process imposes constraints on
governmental decisions which deprive individuals
of ‘liberty’ or ‘property’ interests within the
meaning of the Due Process Clause of … the
Fourteenth Amendment.” Mathews v. Eldridge, 424
U.S. 319, 332 (1976). Put simply, “notice must be
such as is reasonably calculated to reach interested
parties.” Mullane, 339 U.S. at 318. “The essence of
-8due process is the requirement that ‘a person in
jeopardy of serious loss (be given) notice of the case
against him and opportunity to meet it.” Mathews,
424 U.S. at 348.
Thus, the key to due process is reaching
interested parties so they may be heard. “It is a
purpose of the ancient institution of property to
protect those claims upon which people rely in their
daily lives, reliance that must not be arbitrarily
undermined. It is a purpose of the constitutional
right to a hearing to provide an opportunity for a
person to vindicate those claims.” Board of Regents
v. Roth, 408 U.S. 564, 577 (1972).
There is no question that Sunshine was not sent
notice. If nothing else, the City’s insistence on
proceeding “ex parte” and alleging only that it
provided cursory notice that some relief would be
sought without notice of when or where that would
be should suffice.
All of the issues regarding notice — who gave
notice (including when and how), who received
notice (including when and how) — are contested
fact issues that require trial to determine.
Sunshine’s pleadings allege that no notice was ever
given. The City asserts otherwise. Resolution
requires trial.
B.
The City’s Failure To Provide Notice
Made Its Actions Void And Subject To
Attack.
It is settled law that a judicial body failing to
obtain jurisdiction over either the subject of the
-9action or the parties thereto will simply render a
void judgment that is open to attack at any time:
“A void judgment is a legal nullity. See
Black’s Law Dictionary 1822 (3d ed. 1933); see
also id., at 1709 (9th ed. 2009). Although the
term ‘void’ describes a result, rather than the
conditions
that
render
a
judgment
unenforceable, it suffices to say that a void
judgment is one so affected by a fundamental
infirmity that the infirmity may be raised
even after the judgment becomes final. See
Restatement (Second) of Judgments 22
(1980); see generally id., § 12.” United
Student Aid Funds, Inc. v. Espinosa, 559 U.S.
260, 270 (2010).
See also Elliott v. Peirsol’s Lessee, 26 U.S. 328, 329
(1828) (if a court acts “without authority, its
judgments and orders are nullities”).
The City and Receiver failed in their mandatory
duty to notify the property owner and thus failed to
obtain jurisdiction for any of their actions. Those
actions were thus void and subject to attack at any
time. The California courts ignored this
fundamental rule.
II.
The California Courts Ignored Sunshine’s
Takings Claim in Conflict With This Court’s
Settled Precepts.
Regularly, in the modern era of takings law, this
Court has repeated that, if a regulation deprives
property owners of the “economically viable use” or
“economically beneficial or productive use” of their
- 10 property, a taking has occurred. (The first
formulation appeared in Agins v. City of Tiburon,
447 U.S. 255, 260 (1981); the latter refinement
appeared in Lucas v. South Carolina Coastal
Council, 505 U.S. 1003, 1015 (1992).) In Lucas, the
Court was so focused on the impact of government
action on the use remaining to private property
owners, that it used the word “use” 37 times
(generally in conjunction with the words
“economically
productive”
or
“economically
beneficial”). See 505 U.S. at 1016-19, 1027-30. Thus,
contrary to the impression given in the Court of
Appeal’s opinion, the allowance of “some” use is not
constitutionally sufficient, it must be economically
productive. And that is a question of fact that
cannot be resolved without evidence.
By focusing on “productive” or “beneficial” use,
Lucas clearly expressed the idea that the
Constitution protects more than the ability to
simply hold property in some theoretical manner.
Indeed, Mr. Lucas himself was said to have
minimal (though noneconomic) use of his property,
but that was not sufficient to satisfy the Fifth
Amendment. See Lucas, 505 U.S. at 1044
(Blackmun, J., dissenting).
So, here, the actions of the City and Receiver
took Sunshine’s property and did so as soon as the
first ex parte application was filed, without either a
hearing or just compensation. They were
exacerbated when the property was foreclosed via
another ex parte proceeding.
“Property” consists of many things. Indeed, the
concept is so complex that this Court has repeatedly
- 11 used the law professors’ “bundle of sticks” analogy
to illustrate it, concluding that either the taking of
an entire “stick” (or right) from the “bundle” or the
taking of a slice through all the “sticks” violates the
Fifth Amendment’s Just Compensation Clause.
Indeed, it is hard to pick up a property decision by
this Court and not find some reference to the bundle
of sticks as an explanation for the holding. E.g.,
Hodel v. Irving, 481 U.S. 704, 716 (1987); Nollan v.
California Coastal Commn., 483 U.S. 825, 831
(1987); Dolan v. City of Tigard, 512 U.S. 374, 393
(1994); Murr v. Wisconsin, 137 S.Ct. 1933, 1952
(2017) (Roberts, C.J., dissenting); Cedar Point
Nursery v. Hassid, 141 S.Ct. 2063, 2071 (2021).
Freezing the use of Sunshine’s property was a
temporary taking of its right of use. See First
English, 482 U.S. 304. The extent of the
impairment, and the compensation due, is an issue
of fact for trial. Penn Central Transp. Co. v. City of
New York, 438 U.S. 104 (1978).
The decision here needs to blend with the
Court’s decisions generally protecting the rights of
private property owners. The Court recently
summarized that history this way:
“As John Adams tersely put it,
‘[p]roperty must be secured, or liberty
cannot exist.’ Discourses on Davila, in
6 Works of John Adams 280 (C. Adams ed.
1851). This Court agrees, having noted that
protection of property rights is ‘necessary to
preserve freedom’ and ‘empowers persons to
shape and to plan their own destiny in a
world where governments are always eager
- 12 to do so for them.’” Cedar Point, 594 U.S. at
147.
For many decades, California has acted on the
belief that it is free to set its own parameters for
how it treats its property-owning citizens. It has
consistently disregarded this Court’s clear
holdings, even to the point that (until this Court
corrected the situation in First English), property
rights cases were routinely filed in federal court
because the California state courts provided no
compensation remedy. See, e.g., City of Monterey v.
Del Monte Dunes, 526 U.S. 687 (1999). It is time to
return California to the American constitutional
fold. Indeed, it is long past time.
III.
The Court Should Grant Certiorari
To Ensure That The Constitution Prevails
Over Statutes.
Under our system of government, the
Constitution is preeminent. It cannot be undercut
by statutes. The issue here is whether a
constitutional provision held by this Court to be
“self-executing,” i.e., requiring no Congressional
action to enliven it, can be restricted or eliminated
by a mere statute — particularly, as here, a state
statute. In brief, it cannot.
Our Constitution provides a baseline of minimal
protection to all the rights of all citizens, with
individual states having the discretion to provide
more, but never less protection. Simmons v. South
Carolina, 512 U.S. 154, 174 (1994); see West
Virginia State Board of Education v. Barnette, 319
- 13 U.S. 624, 638 (1943). Justice Kavanaugh explained
it this way: “the Constitution sets a floor for the
protection of individual rights. The constitutional
floor is sturdy and often high, but it is a floor. Other
. . . government entities generally possess authority
to safeguard individual rights above and beyond the
rights secured by the U.S. Constitution.” American
Legion v. American Humanist Assn., 139 S.Ct.
2067, 2094 (2019) (Kavanaugh, J., concurring).
Thus, if there is a role for state courts and state
laws, this is it: providing more protection than the
U.S. Constitution mandates. As Professor Akhil
Amar summarized it, “the federal constitution
stands as a secure political safety net—a floor below
which state law may not fall.” 1 As this Court plainly
expressed it, “The American people have declared
their Constitution and the laws made in pursuance
thereof to be supreme.” McCulloch, 17 U.S. at 432.
Beyond that, as the Court classically held in
Marbury v. Madison, 5 U.S. [1 Cr.] 137, 177 (1803),
it is the Court’s job to see that other levels of
government remain true to the Constitution. That
would include protecting the rights of property
Akhil Reed Amar, Philadelphia Revisited: Amending the
Constitution Outside Article V, 55 U. Chi. L. Rev. 1043, 1100
(1988). See Bracy v. Gramley, 520 U.S. 899, 904 (1997) (“the
Due Process Clause . . . establishes a constitutional floor”); see
also Gideon Kanner, Just How Just is Just Compensation?
48 Notre Dame L. Rev. 786, 784 (1973) (“it seems safe to say
that the Constitution—or at least the Bill of Rights—was the
product of the framers’ fear of an overreaching government,
and their desire to protect individual citizens from
governmental excesses. . . . [T]he purpose of the . . . Bill of
Rights [] was to protect the people from the government, not
vice versa.”).
1
- 14 owners from the depredations of state and local
government. Here, that is done by providing
protection against state agencies and officials,
regardless of what state law might otherwise say.
U.S. Const., art. VI, cl. 2. “It is basic to this
constitutional command that all conflicting state
provisions be without effect.” Maryland v.
Louisiana, 451 U.S. 725, 746 (1981); Mutual
Pharmaceutical Co., Inc. v. Bartlett, 570 U.S. 472,
480 (2013).
Because the right to just compensation arises
directly from the Constitution, neither Congress
nor local legislators can abrogate this right. As the
Court put it in Jacobs v. United States, 290 U.S. 13,
17 (1933), “the right to just compensation could not
be taken away by statute or be qualified . . . .” In
Jacobs, the question was whether the failure of
Congress to provide for interest on awards of just
compensation
could
override
the
general
Constitutional
command
for
payment
of
compensation for takings, as interest is part of just
compensation. The Court answered curtly that it
could not, because the Constitution prevailed in
protecting the rights it guarantees. In other words,
“acts of Congress are to be construed and applied in
harmony with and not to thwart the purpose of the
Constitution.” Phelps v. United States, 274 U.S.
341, 344 (1927). The same must be true of state and
local legislation.
A.
The Constitution is paramount.
The Constitution is our paramount authority.
Marbury v. Madison, 5 U.S. 137, 176-77 (1803):
“The
powers of
the
legislature
are
- 15 defined, and limited; and that those limits
may not be mistaken, or forgotten, the
constitution is written. [¶] …. Certainly all
those who have framed written constitutions
contemplate
them
as
forming
the
fundamental and paramount law of the
nation, and consequently the theory of every
such government must be, that an act of the
legislature, repugnant to the constitution, is
void.” (Emphasis added).
The founders of this republic understood history
— particularly the problems that arose because of
the amorphous nature of the national governmental
structure. Early on, this Court concluded that the
Supremacy Clause was adopted in order to ensure
that the central government did not suffer from the
weaknesses that undercut the earlier attempt at
union under the Articles of Confederation,
acknowledging that “the conflicting powers of the
General and State Governments must be brought
into view, and the supremacy of their respective
laws, when they are in opposition, must be settled”
(McCulloch, 17 U.S. at 405):
“The American States, as well as the
American people, have believed a close and
firm Union to be essential to their liberty and
to their happiness. They have been taught by
experience that this Union cannot exist
without a government for the whole, and they
have been taught by the same experience that
this government would be a mere shadow,
that must disappoint all their hopes, unless
invested with large portions of that
sovereignty which belongs to independent
- 16 States. Under the influence of this opinion,
and thus instructed by experience, the
American people, in the conventions of their
respective States, adopted the present
Constitution.” Cohens, 19 U.S. at 380-81. 2
The Constitution — in this case, particularly the
Fifth and Fourteenth Amendments — is thus
supreme against legislative reduction or evasion.
The California courts permitted a statute to
eliminate the right to sue to vindicate the Fifth
Amendment right to compensation for property
taken. To the extent that any legislation can be read
as restricting or eliminating the rights under
constitutional guarantees, that legislation is
“repugnant to the constitution [and] void.”
The Constitution itself lays down this rule, in the
section commonly referred to as the Supremacy
Clause:
“This Constitution, and the Laws of the
United States which shall be made in
Pursuance thereof, . . . shall be the supreme
Law of the Land; and the Judges in every
State shall be bound thereby, any Thing in the
Constitution or Laws of any State to the
Contrary notwithstanding.” (U.S. Const.,
art. VI, cl. 2, emphasis added.)
2 This Court was keenly aware of the deficiencies of the
Articles of Confederation, noting pointedly how national
directives “were habitually disregarded [as being] a fact of
universal notoriety. With the knowledge of this fact, and
under its full pressure, a convention was assembled to change
the system.” Id. at 388. A key part of that change was the
Supremacy Clause. Id. at 381.
- 17 McCulloch was both clear and forceful about
how the Supremacy Clause permeated all
provisions of the Constitution. It referred to that
provision as:
“a principle which so entirely pervades the
Constitution, is so intermixed with the
materials which compose it, so interwoven
with its web, so blended with its texture, as to
be incapable of being separated from it
without rending it into shreds.” McCulloch,
17 U.S. at 426 (emphasis added).
The unifying principle is that “the Constitution
and the laws made in pursuance thereof are
supreme; that they control the Constitution and
laws of the respective States, and cannot be
controlled by them.” McCulloch, 17 U.S. at 426
(emphasis added).
Indeed, when individual rights are incorporated
into the Constitution (through the Bill of Rights),
they become part of the Constitution and thus are
“supreme” over any state provision. See Barnette,
319 U.S. at 638-39.
As Chief Justice Marshall put it, “If then the
courts are to regard the constitution; and the
constitution is superior to any ordinary act of the
legislature; the constitution, and not such ordinary
act, must govern the case to which they both apply.”
Marbury, 5 U.S. at 177-78; see also 1 Charles
Warren, The United States Supreme Court in
United States History 14-15 (rev. ed. 1932) (noting
that “a supremacy of the Constitution and laws of
the Union ‘without a supremacy in the exposition
and execution of them would be as much a mockery
- 18 as a scabbard put into the hands of a soldier without
a sword in it.’” (quoting James Madison)).
The Supremacy Clause stands as a barrier to all
state laws that trench on the rights of private
property owners, like the rigid state statute of
limitations applied here.
B.
The Just Compensation Clause is a
Constitutional Guarantee that This
Court has held to be both Self-Executing
and Irrevocable. It Does Not Depend
Upon Legislative Grace.
Owners’ rights to be secure in their property is
one of the primary objects for which the national
government was formed. In United States v. Jones,
565 U.S. 400, 405 (2012), the Court recalled Lord
Camden’s holding in Entick v. Carrington, 95 Eng.
Rep. 807 (C.P. 1765): “The great end for which men
entered into society was to secure their property.”
This Court explained, “In any society the fullness
and sufficiency of the securities which surround the
individual in use and enjoyment of his property
constitute one of the most certain tests of the
character and value of government.” Monongahela
Nav. Co. v. United States, 148 U.S. 312, 324 (1893)
(followed by Olson v. United States, 292 U.S. 246,
254 (1934)).
This Court held the Fifth Amendment
guarantee of compensation does not “depend on the
good graces of Congress,” explaining:
“[A] landowner is entitled to bring an action
in inverse condemnation as a result of the
‘self-executing
character
of
the
- 19 constitutional provision with respect to
compensation’ . . . . As noted in Justice
Brennan’s dissent in San Diego Gas [], it has
been established at least since Jacobs v.
United States, 290 U.S. 13 (1933), that
claims for just compensation are grounded
in the Constitution itself[.]” First English
Evangelical Lutheran Church v. Los
Angeles, 482 U.S. 304, 315-16 (1987).
The Court reiterated recently that the Just
Compensation Clause is “self-executing.” Knick v.
Township of Scott, 588 U.S. 180, 192 (2019).
In First English, the Solicitor General (as
amicus curiae) urged that the Fifth Amendment
was merely “a limitation on the power of the
Government to act, not a remedial provision.” See
482 U.S. at 316, n.9. The Court rejected that
argument, concluding that it was the Constitution
itself that both established the right and dictated
the remedy. Id.
Indeed, even before San Diego Gas and First
English, this Court found:
“whether the theory . . . be that there was a
taking under the Fifth Amendment, and that
therefore the Tucker Act may be invoked
because it is a claim founded upon the
Constitution, or that there was an implied
promise by the Government to pay for it, is
immaterial. In either event, the claim traces
back to the prohibition of the Fifth
Amendment . . . .” United States v.
Dickinson, 331 U.S. 745, 748 (1947).
- 20 The Fifth Amendment “prevents the public from
loading upon one individual more than his just
share of the burdens of government and says that
when he surrenders to the public something more
and different from that which is exacted from other
members of the public, a full and just equivalent
shall be returned to him.” Monongahela, 148 U.S.
at 325. In other words, cash may not heal all
wounds, but it is a constitutionally acceptable
remedy for unconstitutional government action.
When the government takes an owner’s
property, the government has a “categorical duty”
to comply with the Fifth Amendment. See Arkansas
Game & Fish Comm’n v. United States, 568 U.S. 23,
31 (2012); Horne v. Dept. of Agriculture, 576 U.S.
350, 362 (2015). The government may not escape
this “categorical duty” by creating a statutory
scheme that truncates the Constitutionally
guaranteed compensation when property is taken.
Thus, in First English, this Court held that
California had “truncated” the Fifth Amendment’s
rule by refusing compensation for any part of the
time that the regulation precluded use of the
property. 482 U.S. at 317. So, here, California is up
to its old tricks. The California Court of Appeal
“truncated” the compensation rule by the use and
approval of ex parte procedures that denied
Sunshine both notice and hearing before court
actions affecting its property.
More than that, this Court recently held that the
duty to pay just compensation when government
takes private property is “irrevocable.” Knick, 588
U.S. at 192. A right that is both “self-executing” and
- 21 “irrevocable” cannot be eliminated by a state
statute merely establishing the duties of receivers.
In a somewhat different context, the Court had
no trouble in explaining the priority of the
Constitution over lower forms of regulation, noting
that “[t]he protections afforded by the Commerce
Clause cannot be made to depend on the good grace
of a state agency.” Brown-Forman Distillers Corp.
v. New York State Liquor Auth., 476 U.S. 573, 583
(1986). Governmental “grace” cannot overcome the
Constitution.
The same is true here, where Dana Point’s
violation of settled requirements of notice, both of
the appointment of the Receiver and the sale of the
property by foreclosure, prevented Sunshine from
timely asserting its rights. The City failed even to
substantively address Sunshine’s argument that its
due process rights were violated when the property
was sold at a foreclosure auction without court
approval or the opportunity for Sunshine to be
heard. Such unconstitutional actions cannot be
countenanced.
CONCLUSION
The California courts once again ignored
Constitutional dictates designed to protect private
property owners. The brief opinion below found
multiple ways to violate the Fifth Amendment. This
must stop. The petition for certiorari should be
granted.
- 22 MICHAEL M. BERGER*
*Counsel of Record
MANATT, PHELPS & PHILLIPS
2049 Century Park East, Suite 1700
Los Angeles, CA 90067-3119
(310) 312-4000
mmberger@manatt.com
Counsel for Petitioner
APPENDIX
i
TABLE OF APPENDICES
Page
A P P E N DI X A — O P I N ION O F T H E
COURT OF APPEAL OF CALIFORNIA
FOR T H E FOU RT H A PPELL AT E
DISTRICT, DIVISION THREE, FILED
APRIL 21, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a
A PPENDI X B — J U DGMENT OF THE
SUPERIOR COURT OF CA LIFORNI A
FOR T H E C OU N T Y OF OR A NGE ,
CENTRAL JUSTICE CENTER, FILED
JUNE 13, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40a
APPENDIX C — SUPREME COURT ORDER,
FILED JULY 9, 2025 . . . . . . . . . . . . . . . . . . . . . . . . 43a
1a
AppendixOF
A THE COURT OF
APPENDIX A — OPINION
APPEAL OF CALIFORNIA FOR THE FOURTH
APPELLATE DISTRICT, DIVISION THREE,
FILED APRIL 21, 2025
IN THE COURT OF APPEAL OF THE
STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
G062484, G062828
(Super. Ct. No. 30-2017-00915900)
CITY OF DANA POINT,
Plaintiff and Respondent,
v.
THE SUNSHINE GROUP, LLC,
Defendant and Appellant;
MARK SAMUEL ADAMS,
Real Party in Interest and Respondent.
Filed April 21, 2025
Appeals from an order and judgment of the Superior
Court of Orange County, Theodore R. Howard, Judge,
and James Hansen, Temporary Judge (pursuant to Cal.
Const., art. VI, § 21). Affirmed. Request for Judicial
Notice. Granted.
2a
Appendix A
***
In 2016, an inspection of an approximately 80-year-old
commercial inn revealed substandard conditions which
violated various code provisions and posed an immediate
and significant health and safety hazard to the public.
Respondent the City of Dana Point (the City) deemed the
property not habitable until the substandard conditions
were fixed and so notified the property’s owner, Appellant
The Sunshine Group, LLC (Sunshine).
After Sunshine failed to take action to correct the
substandard conditions, the City filed a petition for the
appointment of a receiver pursuant to Health and Safety
Code section 17980.7, subdivision (c) (section 17980.7(c)).1
The trial court granted the petition and appointed Real
Party in Interest Mark Samuel Adams (receiver) as the
receiver for the property. Following extensive litigation
and the sale of the property, in March 2023, the trial court
granted the receiver’s motion for an order discharging the
receiver and exonerating the surety and ordered Sunshine
to pay the receiver and the City certain fees and costs.
Judgment was entered accordingly.
We affirm. For the reasons we explain, we conclude
(1) the trial court did not misconstrue or misapply section
17980.7(c) and did not abuse its discretion in allowing
the receiver to address the health and safety violations
while also preserving the property’s historic character;
1. All further code references are to the Health and Safety
Code unless otherwise specified.
3a
Appendix A
(2) Sunshine’s due process rights were not violated by
the trial court’s approval of the sale of the property via
ex parte application because Sunshine was no longer the
owner of the property at the time the application was filed;
(3) the trial court did not abuse its discretion by rejecting
Sunshine’s argument the receiver failed to be impartial
and denying its motion to surcharge the receiver; (4) the
trial court did not abuse its discretion in awarding fees
to the receiver; and (5) the trial court did not abuse its
discretion in awarding fees to the City.
FACTUAL AND PROCEDURAL BACKGROUND
I.
Sunshine Is Notified of Substandard Conditions
on the Property and Fails to Take A ny
Corrective Action
In 1998, Sunshine acquired a 1.09 acre parcel of real
property in the City upon which stood an approximately
80-year-old commercial inn known as the Seaside Property
Inn-Capistrano Seaside Inn (the property). The property
is located on Pacific Coast Highway, directly across the
street from the Pacific Ocean. Dr. Ramesh K. Manchanda
is Sunshine’s managing partner.
In 2016, following a “fire and life safety inspection” of
the property, the City and county officials identified health
and safety hazards and code violations at the property,
including the lack of a working fire alarm, smoke detector,
or sprinkler system, and the presence of flammable
4a
Appendix A
materials, dead and dying vegetation adjacent to and
overhanging the property, unlabeled hazardous chemicals,
sliding locking devices, deadbolts, and obstructions to
doorways and windows preventing egress. In addition,
the property had become “a target of opportunity for the
local homeless population.”
Consequently, in a letter dated September 1,
2016 (the letter), the City notified Sunshine that after
the inspection of the property revealed “multiple
substandard/dangerous conditions,” the property had
been declared to be “substandard, dangerous and a public
nuisance.” Attachments to the letter included a “Notice
of Substandard Building” (the notice) which identified
health and safety hazards and code violations at the
property. The notice identified alterations that had been
made to the property without permits, compromising the
property’s structural integrity, electrical system, and
general safety. The letter informed Sunshine it had until
October 3, 2016 to begin taking the specified corrective
actions required to abate the substandard conditions, and
until December 5, 2016 to complete such actions. Sunshine
was further notified it had to obtain all required permits
before beginning that work.
Also attached to the letter was a “Fire and Life
Safety Inspection Notice” identifying the fire and safety
violations at the property that required corrective action
to bring the property into compliance with the fire codes
and to eliminate fire and life safety risks associated with
the property. The county fire inspector who issued that
notice declared the property posed a high fire risk and
5a
Appendix A
severe hazards to occupants and first responders and
demonstrated “a threat to life safety.”
Staff members of the City met with Sunshine’s
representative several times in October 2016 and again in
January 2017, during which meetings the staff members
“informed [the representative] in detail of the process that
was required to bring the Property into compliance with
State and Local Laws, as well as the potential complexities
associated with demolition and new development at
the Property as a result of its low cost affordable
accommodation and historic resource designations.” After
each meeting, Sunshine’s representative assured City
staff that the requisite permit applications would be filed
“‘this week.’”
After Sunshine failed to file any application for permits
relating to the property’s rehabilitation and repair, or the
prevention of further deterioration, on March 21, 2017,
the City Council voted to authorize litigation seeking
the appointment of a receiver over the property. About
two weeks later, on April 5, 2017, Sunshine submitted an
application for a coastal development permit to demolish
the property.
II.
The City Successfully Petitions the Trial Court
to A ppoint a Receiver
In April 2017, the City initiated this action by filing
a petition and motion for an order appointing a receiver
6a
Appendix A
for the property and requiring reimbursements under
section 17980.7 (the petition). In support of the petition,
the City filed a declaration of its director of community
development which stated, inter alia, the property was
then categorized as a low cost affordable accommodation
and was not only listed as an historic resource on the City’s
Historic Resource Inventory, it was listed as an historic
resource on the California Register of Historic Resources.
Following a hearing on April 25, 2017, the trial court
appointed “California Receivership Group, a California
public benefit corporation, through its president Mark
Adams (‘Receiver’) . . . as the Receiver for the Property
and . . . delegated [to the receiver] the duty and power to
correct all of the existing violations now existing upon
the property and to see to it that the violations do not
reoccur.” In its order, the trial court granted the receiver
the authority under section 17980.7(c)(4)(H) and Code of
Civil Procedure section 568 “to generally do such acts
respecting the Property as this Court may authorize,”
and further ordered the receiver to “immediately
supervise and coordinate the inspection of the Property
and securing of the Property in order to assess the
necessary work and prohibit the Property from entry by
unauthorized persons.”
In addition, the court “specifically empowered”
the receiver to (1) “take full and complete control of
the Property”; (2) manage the property; (3) “secure
a cost estimate and construction plan from a licensed
contractor for the repairs necessary to correct the
offending conditions set forth in the City’s notice to
7a
Appendix A
abate”; (4) employ a licensed contractor as necessary to
correct offending conditions; (5) borrow funds to pay for
repairs as necessary and “secure that debt with a superpriority lien on the Property”; (6) “exercise the powers
granted to receivers under section 568 of the Code of
Civil Procedure”; and (7) “apply to this Court for further
or other instructions or orders and for further powers
necessary to enable the Receiver to perform its duties
properly, or to address unforeseen circumstances that
may arise with respect to this receivership.”
III.
The Trial Court A pproves the Construction Plan
to Remediate the Property and the A dditional
Funding Request, and Rejects Sunshine’s Motion
to Terminate the Receivership
In 2017, the receiver reported to the court Sunshine
expressed its preference to have the property’s structures
demolished and to “build anew.” He further reported it was
the City’s position that the property should be preserved
because it was listed as an historic resource and was
categorized as “‘a low cost affordable accommodation.’” 2
2. Section 17980, subdivision (c)(2) provides: “In deciding
whether to require vacation of the building or to repair as
necessary, the enforcement agency shall give preference to the
repair of the building whenever it is economically feasible to do
so without having to repair more than 75 percent of the dwelling,
as determined by the enforcement agency, and shall give full
consideration to the needs for housing as expressed in the local
jurisdiction’s housing element.” (See Pub. Resources Code, § 30213
8a
Appendix A
The receiver advised the court that, in his opinion,
the property could be rehabilitated and should not be
demolished. He further advised that Miken Construction
(Miken), a licensed contractor California Receiver Group
has used on similar properties throughout California,
performed a thorough inspection of the entire property
on May 15, 2017 and thereafter provided an initial cost
estimate of $863,000 to remediate all of the issues at the
property.
The receiver additionally “obtained an initial value
estimate from a firm which specializes in hospitality
properties,” which estimated “the ‘as improved’ value of
the Property will be at least $6 million,” such that the
cost of remediation should “be more than offset by the
increased value of the Property.” Sunshine disputed the
property as rehabilitated would be profitable.
Following the July 7, 2017 hearing on an order to show
cause to confirm the receiver’s appointment and to approve
the receiver’s initial funding request, the trial court
observed that Sunshine’s proposed demolition plan would
likely be subject to regulations of the Coastal Commission.
The court explained the purpose of the receivership was
to abate substandard property, not to ensure a property’s
profitability. The trial court confirmed the receiver’s
appointment, approved the receiver’s recommended
[“Lower cost visitor and recreational facilities shall be protected,
encouraged, and, where feasible, provided”].) In the respondent’s
brief, the City cited Dana Point Municipal Code section 9.07.250
which it described as “setting forth [a] program to preserve
historic properties.”
9a
Appendix A
abatement plan, and approved increasing the receiver’s
certificates.
The following month, the receiver learned that
because the required repairs encompassed over 50
percent of the property, architectural drawings would
need to be submitted to and approved by the City and all
repairs would need to be brought up to the current code.
The receiver retained Architectural Resources Group
(ARG), an architectural firm specializing in historic
properties, to develop construction plans “that both
preserve the historical significance of the Property while
addressing the necessary health and safety repairs, all
while utilizing the Historic Building Code, which would
significantly reduce construction costs by avoiding certain
requirements that would be necessary under current code
standards.”
The receiver reported that after the receiver provided
copies of ARG’s final construction drawing and project
manual to Sunshine’s principal, Manchanda, for his
contractors to prepare competing bids, the receiver filed
a motion requesting an additional $4 million in funding
to cover the construction costs necessary to complete the
remediation, cover the estimated security costs during
construction, and cover the estimated receiver and City
fees throughout the construction period. The receiver
stated he expected Manchanda to submit alternative bids
for the trial court’s consideration, but no such bids were
submitted.
10a
Appendix A
Sunshine opposed the receiver’s motion for additional
funding and filed a motion to terminate the receivership.
In a detailed minute order dated October 26, 2018, the
trial court granted the receiver’s motion to increase
the receiver’s certificate, to be secured by a superpriority deed of trust, and denied Sunshine’s motion to
terminate the receivership. The court found the receiver
substantiated the amount of funding requested and that
various costs appeared reasonable to the court.
The court also found Sunshine’s “moving papers do not
set forth sufficient grounds to terminate the receivership.”
As to Sunshine’s argument the receivership was taking
too long, the court found “many of the delays have been
due to [Sunshine]’s actions and/or inactions.” The court
also noted while Sunshine “takes issue with the proposed
construction and remediation costs . . . [it] has not provided
any reasonable alternative, other than to repeatedly
demand authorization to demolish the property.” The
court added that while Sunshine titled its motion as one
seeking to terminate the receivership, its motion “again
repeats [its] request for an order allowing it to demolish
the property. This request has been rejected in the past.
The purpose of the receivership here is to abate the
substandard conditions at the property, while at the same
time maintaining its historical character and compliance
with Coastal Act requirements; demolition would not
further these goals.”
11a
Appendix A
IV.
Sunshine’s A ppeal from the Order A pproving
the Receiver’s Funding Request and
Its Bankruptcy Petition
Sunshine appealed from the trial court’s order
approving the receiver’s funding request and filed a
petition for writ of supersedeas in this court seeking a stay
of that order pending its appeal. In November 2018, this
court issued the requested stay, but in December 2018,
denied the petition and dissolved the stay.
The receiver issued a receiver’s certificate to Miken to
provide Miken security for its work on the property and
filed an ex parte application seeking court approval of the
subordination of the original receiver’s certificate that had
been issued in favor of Manchanda. The day before the
hearing on the receiver’s ex parte application in March
2019, Sunshine filed a bankruptcy petition. Sunshine also
filed a motion requesting the bankruptcy court approve
the sale of the property to Dr. Nirmal Kumar, a friend of
Manchanda’s. The bankruptcy court denied Sunshine’s
motion, concluding Sunshine had attempted “to forum
shop its way into a potentially friendlier venue” which
the court found “to be an abuse of the judicial process
and inconsistent with the spirit of the Bankruptcy Code,”
and dismissed the bankruptcy case. 3 Sunshine eventually
dismissed its appeal.
3. The Ninth Circuit Bankruptcy Appellate Panel later
affirmed the dismissal order.
12a
Appendix A
Following a court-ordered mandatory settlement
conference, the parties and the receiver agreed to the
implementation of the remediation plan approved by
the court on October 26, 2018 and specifically agreed
to the sale of the property for no less than $3.1 million
and contingent on the buyer’s agreement to complete
the repairs and the receiver’s monitoring to ensure the
proper and timely completion of the remediation process
(the settlement agreement).
V.
The Receiver Entertains Offers to Purchase
the Property But the Court Does Not A pprove a
Qualifying Offer After the Receiver Clarifies the
Property Was Not Listed on an Historic Registry
In April 2019, the trial court authorized the receiver
to sell the property. After receiving several offers, the
receiver filed a motion to confirm the sale of the property
“as is” for $3.1 million pursuant to the terms of the
settlement agreement. The receiver informed the court
that a $3.85 million offer had been submitted by Kumar,
but he did not agree to the remediation of the property
pursuant to the plan approved by the court and required
by the settlement agreement. In support of its motion,
the receiver filed his declaration in which he informed
the court he had learned the property was not listed
as an historic resource on the California Register of
Historic Resources or the Dana Point Historic Resources
Inventory, but was eligible to be on those lists.
13a
Appendix A
In July 2019, the receiver reported having received
another and higher offer to purchase the property, this
time from Artist Guild Hospitality, LLC (AGH), which also
agreed to remediate the property pursuant to the court’s
order and the settlement agreement. The receiver received
three other bids to purchase the property, but only one of
those three proposed buyers agreed to comply with the
remediation requirement of the settlement agreement.
That bidder’s offer, however, was about $600,000 less than
AGH’s offer.
The receiver recommended the court approve AGH’s
$3.8 million offer to purchase the property. In October
2019, however, the trial court denied the receiver’s motion
for approval to sell the property on the ground there had
been a “mistake of fact” as to whether the property was
included on an historical resources list. The court did not
vacate the settlement agreement, but “left it to the parties
to work out a resolution based on the additional option of
demolition.” The court made no ruling on the property’s
status as an historic resource.
VI.
After The Super-priority Receiver’s Certificate
Matures and Refinancing Efforts Fail,
the Property Is Sold to Miken at a Trustee’s Sale;
the Court Thereafter A pproves the Sale of
the Property to AGH
In Aug ust 2020, the super-priority receiver’s
certificate funded by Glan Investments matured. After
14a
Appendix A
the receiver’s unsuccessful negotiations with Manchanda
to refinance the note, Miken, a junior lien holder, agreed
with Glan Investments to take assignment of the matured
super-priority receiver’s certificate. Because Manchanda
did not agree to pay off what was now Miken’s note, a payoff
the receiver explained “would [have] extinguish[ed] it and
remove[d] it as debt on the Property,” Miken proceeded
with a trustee’s sale of the property on July 20, 2020.
This sale was attended by both Manchanda and Kumar.
No bids, however, were submitted and the property was
sold to Miken for the credit bid amount.
In May 2021, the City filed an ex parte application
asking the trial court to approve the settlement agreement
and authorize Miken’s sale of the property to AGH. The
court granted the application, approved the settlement
agreement, and authorized Miken’s sale of the property
to AGH, which closed on June 23, 2021.
VII.
The Trial Court Grants the Receiver’s Motion for
Discharge, Exoneration of Surety, and Payment of
Costs and Fees; Denies Sunshine’s Surcharge Motion;
and Awards the City Its Attorney Fees
In October 2021, the receiver filed a motion for
discharge of receiver, exoneration of surety, and payment
of fees and costs; the motion was set for hearing in March
2022. Sunshine thereafter filed five ex parte applications,
a petition for writ of mandate in this court which was
denied, and a petition for review in the California Supreme
15a
Appendix A
Court which was denied. Sunshine also filed a motion to
surcharge the receiver.
Almost one and a half years later, on March 1, 2023,
the trial court issued a minute order (1) granting the
receiver’s motion for discharge of receiver, exoneration
of surety, and payment of receivership fees; (2) awarding
the receiver a total of $488,548.66 in fees, including
$459,833.62 enforceable against Sunshine; (3) awarding
the City $841,382.88 in attorney fees against Sunshine;
and (4) denying Sunshine’s motion to surcharge the
receiver. In its order, the trial court found the property
was an historic resource and that it was not also listed on
an historic registry was inconsequential. Additionally, as
to Sunshine’s arguments the receiver had failed to act
impartially, the trial court erred by approving Miken’s
sale of the property to AGH via an ex parte application,
and the court further erred by awarding fees to the
receiver and to the City, the trial court rejected each.
In its order, the court observed, inter alia, Sunshine’s
own lengthy delays and/or inaction led to the property
being sold at a trustee’s sale. The court also found
Sunshine had every opportunity to assume the liens on
the property to avoid the trustee’s sale, to purchase the
property at the trustee’s sale, or to proceed with the
remediation plans, but failed to do so. Instead, the court
found, Sunshine “participated in lengthy protracted legal
maneuvering that ultimately led to the Property being sold
to Miken due to Sunshine not meaningfully participating
in remediating the issues that brought about this action.”
16a
Appendix A
Sunshine timely filed a notice of appeal from the
March 1, 2023 minute order under the collateral order
doctrine. (See Schreiber v. Ditch Road Investors (1980)
105 Cal.App.3d 675, 677, 164 Cal. Rptr. 633.)
VIII.
The Judgment
On June 13, 2023, final judgment was entered in
favor of the City and the receiver and against Sunshine.
The judgment stated the receiver’s motion for discharge
of receiver, exoneration of security, and payment of
receivership fees was granted and judgment was entered
in favor of the City and the receiver. The judgment
awarded the receiver $459,833.62 in fees and costs against
Sunshine and awarded the City $841,382.88 in attorney
fees against Sunshine.
Sunshine filed a timely notice of appeal from the
judgment. Sunshine filed an unopposed motion to
consolidate its two appeals. This court granted that
motion.
REQUEST FOR JUDICIAL NOTICE
The City has filed an unopposed request for judicial
notice requesting this court take judicial notice of the
following: (1) the City’s opposition to Sunshine’s election
of remedies (demolition) filed on October 9, 2019; (2) the
City’s petition for a peremptory writ of mandate filed with
this court on October 18, 2019; and (3) this court’s October
17a
Appendix A
31, 2019 order denying the City’s petition for peremptory
writ of mandate.
We treat the City’s request for judicial notice of the
City’s opposition to Sunshine’s election of remedies filed on
October 9, 2019 as a motion to augment the record under
California Rules of Court, rule 8.155(a)(1); we grant that
request. We also grant the City’s request for judicial notice
of the City’s petition for a peremptory writ of mandate
filed in this court on October 18, 2019, and our October 31,
2019 order denying that petition. (Evid. Code, §§ 452, 459.)
DISCUSSION
I.
The Trial Court Did Not Misconstrue or Misapply
Section 17980.7(c) or Otherwise Abuse Its Discretion
With Respect to The Receiver’s Statutory Authority
Sunshine argues the trial court “misconstrued and
misapplied” section 17980.7(c) by “allow[ing] the receiver
to act far beyond the scope of his appointment under the
statute.” (Boldface and capitalization omitted.) For the
reasons we will explain, Sunshine has failed to show the
trial court erred.
A. Overview of Receiverships Under Section 17980.7
“Sections 17980.6 and 17980.7 of the Health and Safety
Code[] compose a statutory scheme providing certain
remedies to address substandard residential housing
18a
Appendix A
that is unsafe to occupy. Pursuant to section 17980.6,
an enforcement agency may issue a notice to an owner
to repair or abate property conditions that violate state
or local building standards and substantially endanger
the health and safety of residents or the public. Section
17980.7 provides that, if the owner fails to comply with
the notice despite having been afforded a reasonable
opportunity to do so, the enforcement agency may seek
judicial appointment of a receiver to assume control over
the property and remediate the violations or take other
appropriate action.” (City of Santa Monica v. Gonzalez
(2008) 43 Cal.4th 905, 912, 76 Cal. Rptr. 3d 483, 182 P.3d
1027 (Gonzalez), fn. omitted.)
“The function of the receiver is to aid the court in
preserving and managing the property involved in a
particular lawsuit for the benefit of those to whom it can
ultimately be determined to belong. [Citations.] A receiver
is an officer of the court and is subject to the court’s
continuing control. . . . The receiver, acting for the court,
is not the agent of any party but acts for the benefit of
all holding an interest in the receivership property. . . .
[¶] . . . The receiver acquires no title in the property but
instead acts as an officer of the court, and title remains
vested in those persons or entities in whom it was vested
when the receiver was appointed.” (City of Sierra Madre
v. SunTrust Mortgage, Inc. (2019) 32 Cal.App.5th 648,
656, 244 Cal. Rptr. 3d 118 (SunTrust).)
“[T]he functions and powers of a receiver are
controlled by statute, by the order of appointment, and
19a
Appendix A
by the court’s subsequent orders.” (Gonzalez, supra, 43
Cal.4th at p. 930.) Section 17980.7(c)(4) provides in part:
“(4) Any receiver appointed pursuant to this section shall
have all of the following powers and duties in the order
of priority listed in this paragraph, unless the court
otherwise permits:
“(A) To take full and complete control of the
substandard property.
“(B) To manage the substandard building and pay
expenses of the operation of the substandard building and
real property upon which the building is located, including
taxes, insurance, utilities, general maintenance, and debt
secured by an interest in the real property.
“(C) To secure a cost estimate and construction plan
from a licensed contractor for the repairs necessary to
correct the conditions cited in the notice of violation.
“(D) To enter into contracts and employ a licensed
contractor as necessary to correct the conditions cited in
the notice of violation. [¶] . . .
“(G) To borrow funds to pay for repairs necessary to
correct the conditions cited in the notice of violation . . .
and, with court approval, secure that debt and any moneys
owed to . . . the receiver for services performed pursuant
to this article with a lien on the real property upon which
the substandard building is located. . . .
20a
Appendix A
“(H) To exercise the powers granted to receivers
under Section 568 of the Code of Civil Procedure.”4
B. Governing Standards of Review
“Our determination of the proper scope of the trial
court’s authority and inquiry under section 17980.7(c) is a
matter of statutory construction we review de novo.” (City
of Desert Hot Springs v. Valenti (2019) 43 Cal.App.5th
788, 793, 256 Cal. Rptr. 3d 876.) Most matters related to
receiverships, however, “rest in the sound discretion of the
trial court” and will not be disturbed on appeal absent an
abuse of that discretion. (SunTrust, supra, 32 Cal.App.5th
at pp. 657-658, 660; see Gonzalez, supra, 43 Cal.4th at p.
931 [the trial court’s rulings with respect to receivership
matters are typically “afforded considerable deference
on review”].) “Such deference is the rule, even where the
court confirms extraordinary action by the receiver, such
as a sale of real property.” (Gonzalez, at p. 931.)
C. Sunshine Failed to Show the Trial Court Allowed
the Receiver to Act Beyond the Scope of His
Authority Under Section 17980.7(c)
Sunshine does not argue the trial court ever expressly
authorized the receiver to act in excess of powers provided
4. “The 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, italics added.)
21a
Appendix A
in section 17980.7(c). Instead, Sunshine argues the
court erred by allowing the receiver to take statutorily
unauthorized action. In its opening brief, Sunshine argues
“[t]he statutory scheme does not . . . provide for the trial
court to go beyond the remediation of . . . alleged violations
to require the full restoration of a historic resource,” and
yet, the receiver “did not limit his actions to remediating
the violations set forth in the City’s September 1, 2016
notice of violation.” Sunshine’s argument continues:
“[T]he facts show that the Receiver spent all his time, and
incurred exorbitant fees by, allying himself to the City
in its quest to restore the Property according to historic
standards, instead of focusing only on abatement work to
address the health and safety violations identified by the
City.” It further argues: “Simply put, by not considering
the limits on what the Receiver was authorized to do under
the statute and, instead, allowing the Receiver to require
work be done to the more exacting ARG architectural
standards for the ‘historic characteristics of the Property’
[citations] despite the fact that the costs of remediation
according to those standards was almost $2 million more
than the cost for a non-historic site [citation], the Court
erred because the statute does not authorize that.”
In support of its argument on this point, Sunshine
only offers one set of string cites to pages in the record
without any accompanying description or discussion.
Those string record citations (to the extent they are
relevant to its argument) reference excerpts from the
receiver’s reports and other filings with the court in
which the receiver simply reports his efforts to address
the property’s substandard conditions and code violations
while preserving the property’s historical character.
22a
Appendix A
It is fundamental to appellate review “a judgment is
presumed correct” and “all intendments and presumptions
are indulged in favor of correctness.” (Fladeboe v.
American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42,
58, 58 Cal. Rptr. 3d 225.) It is also fundamental: “The
one contesting [the judgment] thus bears the burden
of showing legal error. That requires legal authority.”
(Singman v. IMDB.com, Inc. (2021) 72 Cal.App.5th
1150, 1151, 287 Cal. Rptr. 3d 717.) “‘This means that an
appellant must do more than assert error and leave it to
the appellate court to search the record and the law books
to test his claim. The appellant must present an adequate
argument including citations to supporting authorities and
to relevant portions of the record. [Citations.]’ [Citation.]
Accordingly, the California Rules of Court expressly
require appellate briefs to ‘[s]tate each point . . . and
support each point by argument and, if possible, by citation
of authority’ and to ‘[s]upport any reference to a matter in
the record by a citation to the volume and page number of
the record where the matter appears.’ (Cal. Rules of Court,
rule 8.204(a)(1)(B) & (C).)” (L.O. v. Kilrain (2023) 96 Cal.
App.5th 616, 619-620, 314 Cal. Rptr. 3d 470.) Furthermore,
“‘[w]hen legal argument with citation to authority is not
furnished on a particular point, we may treat the point
as forfeited and pass it without consideration. . . . We are
not required to examine undeveloped claims or to supply
arguments for the litigants.’” (Martine v. Heavenly Valley
Limited Partnership (2018) 27 Cal.App.5th 715, 728, 238
Cal. Rptr. 3d 237 (Martine).)
Here, Sunshine’s cited evidence the receiver reported
to the court he was working to address the property’s
23a
Appendix A
health and safety violations while preserving the historic
character of the property does not, in and of itself,
establish that the receiver exceeded the scope of his
authority under section 17980.7(c); Sunshine does not
argue otherwise. Its argument depends on the additional
assertions the receiver improperly allied with the City,
“spent all his time” incurring exorbitant fees in a quest to
embark on a $2 million restoration project, and imposed
unnecessarily exacting architectural standards, instead of
focusing on remediating the property’s health and safety
violations. Those assertions, however, are unsupported by
citations to evidence in the record and its argument does
not include any relevant legal analysis with citations to
legal authority. Consequently, Sunshine’s argument the
trial court erred by allowing the receiver to exceed his
statutory authority is forfeited.
Even if this argument were not forfeited, however,
we would conclude it is without merit. There is no dispute
the property required extensive remediation at the
time the receiver was appointed. Attachment A to the
letter reported the property’s grounds and structures
had not been maintained “for some time” and appeared
dilapidated, and “[u]npermitted and hazardous structural
members, electrical conditions and Fire Code violations
constitute[d] an immediate life, safety hazard.” As to the
referenced unpermitted hazards, attachment A specifies
the electrical system to “the Inn Keepers Cottage” and the
guest rooms had been altered, the “structural integrity”
of the guest rooms, garage, and laundry room had also
been altered, and the guest room bathrooms had been
remodeled, all without permits, resulting in “immediate
hazardous/dangerous condition[s].”
24a
Appendix A
Sunshine does not challenge in this appeal the validity
of the letter, any of the substandard conditions and code
violations identified in the attachments to the letter, or the
court’s order appointing a receiver for the property in the
first place. Significantly, Sunshine does not dispute the
property is an “‘historical resource’” within the meaning
of section 5024.1, subdivision (g) of the Public Resources
Code, and section 15064.5(a) of title 14 of the California
Code of Regulations, as found by the trial court in its
March 1, 2023 order. And Sunshine does not dispute, as
stated by the trial court in the same order, “[a] significant
change in a historical resource . . . will have a significant
effect on the environment under the code and qualify for
special consideration.”
Notwithstanding these concessions, Sunshine argues
the receiver exceeded his statutory authority because he
endeavored to address the identified code violations and
substandard conditions in a manner that also preserved
the property’s established historic character. We conclude
the trial court had discretion under section 17980.7(c) to
order the receiver to remediate the noticed health and
safety violations while preserving the property’s historic
character. Here, in appointing the receiver, the trial court
exercised that discretion by, inter alia, authorizing funds
to be used by the receiver “to preserve and maintain the
Property and to help ensure the rehabilitation and cleanup
of said property as the Receiver sees fit to order.” (Italics
added.) Moreover, the receiver’s reports cited by Sunshine
as discussed ante show that throughout the litigation
the receiver dutifully informed the court of his efforts to
address the health and safety violations while preserving
25a
Appendix A
the historic character of the property. Hence the record
does not establish the receiver ever acted outside the
supervision and approval of the trial court in performing
his duties, and Sunshine does not argue otherwise.
In sum, we conclude Sunshine failed to show the trial
court misunderstood or misapplied section 17980.7 or
abused its discretion under that statute by allowing the
receiver to work to preserve the property’s historical
character while remediating the noticed health and safety
violations.
II.
Sunshine Did Not Own the Property at the Time the
Trial Court Granted the Receiver Its A pproval to
Sell the Property
In its opening brief, Sunshine argues the trial court
erred by granting the City’s ex parte application seeking
court approval to sell the property instead of requiring the
City to file a noticed motion “with evidence and witnesses”
before giving such approval. Sunshine acknowledges
section 17980.7(c)(4) vests in receivers “substantial powers
over substandard property” and “may sometimes even sell
the real property they control.” (See Gonzalez, supra, 43
Cal.4th at p. 930 [holding § 17980.7 “empowers the receiver
to sell the property or to take any other action respecting
the property as the court may authorize”]; Cal-American
Income Property Fund VII v. Brown Development Corp.
(1982) 138 Cal.App.3d 268, 273-274, 187 Cal. Rptr. 703
[“Code of Civil Procedure sections 568 and 568.5 authorize
26a
Appendix A
the receiver to perform such acts respecting the property
as the court may authorize, including the sale of real
and personal property upon notice and subject to court
confirmation” (fns. omitted)].)
Sunshine argues here, however, “[t]he proposed sale of
the Property affected Sunshine’s important right to control
and enjoy its property, and therefore, the considerations
weighed in favor of the most robust procedural protections
to decrease the likelihood of erroneous taking of private
property rights.” Sunshine further argues: “As a result
of the Court’s decision to grant the requested relief on
an ex parte basis, Sunshine was divested of its property
through the acts of the Receiver and the rushed sale of
the Property to Miken, which gave it the appearance of an
insider deal and simply does not comport with due process
rights and protections.”
The main problem with Sunshine’s due process
argument is that at the time the City applied ex parte for
an order approving the sale of the property in May 2021,
Sunshine no longer owned the property. As explained in
the March 1, 2023 minute order, “Sunshine’s own lengthy
delays and/or inaction led [to] the Property being sold at a
Trustee’s sale” almost a year earlier in July 2020. In the
March 1, 2023 minute order, the trial court explained:
“Sunshine had every opportunity to assume the liens on
the Property in order to avoid a Trustee’s sale, to purchase
the Property at the Trustee’s sale, or proceed with
remediation plans, but failed to do so. Instead, Sunshine
participated in lengthy protracted legal maneuvering that
ultimately led to the Property being sold to Miken.” The
27a
Appendix A
City’s ex parte application itself explains that in 2020,
Glan Investments initiated foreclosure proceedings on
its receiver’s certificate and, during that process, Miken
purchased the Glan note and then became the owner of
the property.
Even if Sunshine had been the owner of the property
at the time the City filed the ex parte application, Sunshine
does not explain why the asserted procedural error would
require reversal, particularly given the fact Sunshine filed
an opposition to the ex parte application. Sunshine asserts
its due process rights were violated, but does not provide
relevant constitutional analysis. Instead it merely argues
it was not given the opportunity to present witnesses and
other evidence it neither identified nor described in its
opposition to the ex parte application or in their appellate
briefs in this appeal.
As any procedural deficiency in the City’s manner of
obtaining court approval for the sale of the property from
Miken to AGH did not affect Sunshine, much less deprive
it of its constitutional rights to due process, Sunshine
has failed to show prejudicial error in the court’s order
granting the receiver’s ex parte application.
28a
Appendix A
III.
The Trial Court Did Not Abuse Its Discretion in
Rejecting Sunshine’s Argument the Receiver
Had Failed to Act Impartially and for the
Benefit of A ll Parties
Sunshine next argues its due process rights were
violated because the receiver failed to be impartial and
act for the benefit of all parties. In the opening brief,
Sunshine states: “From the outset of the Receivership, the
Receiver failed to preserve and manage the Property for
the benefit of Sunshine, the owner of the Property, despite
its obligation to act in the interests of not only the City, but
Sunshine as well. [Citation.] Whether by refusing to secure
competitive bids before selecting his own contractor, or by
failing to investigate the City’s claim that the Property
was designated as historic, the Receiver acted against the
interests of Sunshine, only later admitting that the City
was wrong. [Citation.] Indeed, throughout the litigation,
the Receiver did the City’s bidding, by insisting on the
restoration of the Property according to the standards
for a historic resource, denying Sunshine’s repeated
requests for an economic feasibility study, rejecting all
reasonable alternatives—such as demolition—presented
by Sunshine, and summarily dismissing high offers from
potential buyers who were perceived by the Receiver to
have a relationship with Sunshine and/or its managing
member, Dr. Manchanda.” (Boldface and italics omitted.)
Again, Sunshine offers no legal analysis or citations to
evidence in the record in support of its argument except
29a
Appendix A
to cite the following portion of the receiver’s declaration
filed in support of his motion for authority to approve
and confirm the sale of the property: “The Property is
not listed as an historic resource on both the California
Register of Historic Resources, and the Dana Point
Historic Resources Inventory, rather, it is eligible to be
on those lists. I had previously relied on statements made
by the City of Dana Point.”
In its March 1, 2023 order denying Sunshine’s motion
to surcharge the receiver, the trial court expressly
addressed and rejected Sunshine’s contention the receiver
failed to be impartial. The court stated that while the City
official’s misstatement that the property was already listed
on an historic registry resulted in a “misunderstanding,”
the “City and Receiver’s incorrect belief the Property
was actually list[ed] on a historical index when it was
not, d[id] not support a surcharge.” The court explained
the misunderstanding was not consequential because
the property, although not already listed on an historical
index, constituted an “‘historical resource’” pursuant
to section 15064.5(a) of title 14 of the California Code
of Regulations and section 5024.1, subdivision (g) of
the Public Resources Code. The court further noted
the property’s “‘historical resource’” qualification was
determined back in 1997 and 2016—well before the instant
litigation commenced—rendering it eligible for listing
on historical indexes. Sunshine does not address any of
the trial court’s findings on this point much less explain
how the trial court abused its discretion in concluding
the misunderstanding regarding the property’s historic
registry status did not show the receiver had been
impartial and should be subject to surcharge.
30a
Appendix A
As to other asserted instances of the receiver’s lack
of neutrality, again, Sunshine does not cite to the record
or to legal authority, or otherwise provide any legal
analysis supporting its position, and thus has forfeited its
argument on this point. (Martine, supra, 27 Cal.App.5th
at p. 728 [appellate issue forfeited when unsupported by
legal argument with citation to authority].)
If we were to reach Sunshine’s additional arguments
on the issue of the receiver’s neutrality, we would find them
to be without merit. In granting the receiver’s motion to
increase the amount of the receiver’s certificate in October
2018, the trial court addressed and rejected Sunshine’s
contention the receiver refused to consider competitive
bids as “speculative and argumentative at best.”
In addition, in the March 1, 2023 order, the trial
court also expressly found “there is no evidence Receiver
lacked neutrality.”5 The court explained: “Working with
5. In its opening brief, Sunshine cites to a 2020 tentative
ruling on a motion for interim receiver fees in which one of the
trial judges involved in this case stated: “‘Instead of maintaining
neutrality, the receiver appears to have repeatedly found reasons
not to demolish. . . . Here, the receiver may appear to have
advanced the City’s position and vision and perhaps misplaced
neutrality in favor of expedience which of course was not expedient
at all.’” (Boldface and italics omitted.) That tentative decision never
became the trial court’s final decision. “[A] tentative statement of
decision is not binding on the trial court and can be modified or
changed as the judge sees fit before entry of judgment. [Citations.]
A tentative decision cannot be relied on to impeach the judgment
on appeal.” (FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th
1270, 1284, 95 Cal. Rptr. 3d 307.) As we discuss ante, in the trial
31a
Appendix A
companies (such as Glan and Miken) on prior or subsequent
occasions does not violate a receiver’s duty of neutrality.
Receiver[]s would be unable to act in their official
capacity if they were only permitted to use the services of
companies once. There is no evidence of collusion between
Receiver and any other party that has been involved in
this matter.” The court added the evidence presented by
Sunshine does not support a finding the receiver acted
as “‘secret escrow agency for a private money lender’” as
contended by Sunshine.
As for considering demolition as an option for the
property, the trial court stated: “A significant change
in a historical resource, such as demolition, will have a
significant effect on the environment under the code and
qualify for special consideration.” In any event, the court
found that the receiver “proceeding with rehabilitation
versus demolition did not cause any damage to Sunshine.”
Sunshine has not addressed the above cited court
orders or otherwise challenged the trial court’s analysis
rejecting Sunshine’s contentions the receiver lacked
impartiality. We see no basis for concluding the trial court
abused its discretion in evaluating Sunshine’s arguments.
In addition, Sunshine has failed to show the receiver
refused its request for a feasibility study or that the
receiver summarily dismissed any qualifying competitive
offers from potential buyers of the property.
court’s subsequent March 1, 2023 order, the court expressly found
the receiver had not “lacked neutrality” and judgment was entered
accordingly.
32a
Appendix A
As we find no error in the court’s analysis of Sunshine’s
argument the receiver lacked impartiality, we find no error
in the court’s denial of Sunshine’s motion for a surcharge
brought on that basis.
IV.
The Trial Court Did Not Abuse Its Discretion in
Awarding the Receiver Fees and Costs
Sunshine argues the trial court erred by awarding
the receiver fees and costs. Sunshine’s argument is
unpersuasive.
A. Governing Legal Principles and Standard of
Review
“‘Receivers are entitled to compensation for their own
services and the services performed by their attorneys.’”
(Southern California Sunbelt Developers, Inc. v. Banyan
Limited Partnership (2017) 8 Cal.App.5th 910, 922, 214
Cal. Rptr. 3d 719; see § 17980.7(c)(5) [“The receiver shall
be entitled to the same fees, commissions, and necessary
expenses as receivers in actions to foreclose mortgages”].)
“[T]he amount of compensation paid to a receiver is
within the court’s discretion. [Citation.] And although
the receiver’s compensation is typically paid from the
receivership estate, the court has considerable discretion
to determine who must ultimately bear the cost of the
receivership.” (SunTrust, supra, 32 Cal.App.5th at p. 657.)
33a
Appendix A
B. The Trial Court Awarded the Receiver a Reduced
Amount of Fees and Costs
In the March 1, 2023 order, the trial court awarded the
receiver an amount of fees and costs that was 39 percent
less than what the receiver had requested. The court
explained its fees and costs award as follows:
“Receiver presently requests final payment of the
additional remaining fees and costs of $2,061,163, which
comes from $1,053,385.08 for combined Receiver fees and
costs, and $1,007,778.32 for City of Dana Point’s (‘City’)
fees and costs. [Citations.] There are no funds remaining in
the receivership accounts at this time. [Citation.] Receiver
requests the court hold Sunshine and Manchanda jointly and
severally liable for the unpaid costs. Those unpaid costs are:
Amount:
$849,048.00
Purpose:
Unpaid Receiver fees
between May 2019
through September 2021
$6,690.65
Unreimbursed costs to
CRG
$172,646,43
Unpaid attorney fees to
Receiver’s counsel
$25,000.00
Anticipated additional
fees incurred through to
hearing
$1,007,778.32 City’s unpaid Attorney
fees and Costs
Payable to:
Receiver
Receiver
Receiver
Receiver
City
34a
Appendix A
”[¶] . . . [¶]
“The present motion only requests unpaid receiver
fees from May 2019 through September 2021 in the
amount of $849,048.00. In review ing the invoices
submitted by Receiver, the amounts billed appear to be
an average of at least 39% higher than is reasonable.
This is largely due to approximately 14 staff members
submitting billing each month, with extensive billing
for administrative functions, billing for multiple people
without any apparent necessity or work, and other items
which are not reasonable expenses. The court hereby
reduces the requested $849,048.00 amount by the 39%
average in overbilling, and awards Receiver $517,919.28
for fees during that time.
“The $469,186.25 in receivership fees already paid
must also be reduced by that 39%, which equates to
$182,982.64 in an overpayment on Receiver fees. The court
will reduce that amount from the present/pending award
($517,919.28—$182,982.64 = $334,936.64). The court
hereby awards Receiver $334,936.64 for remaining fees.
“[¶] . . . [¶]
“The requested $172,646.43 in Receiver’s unpaid
attorney fees incurred by Receiver is also high. The court
previously granted Receiver’s request for permission to
retain outside counsel, but the court specifically noted
that the $675/hr. billing rate was double the hourly rate of
Receiver and that the court would be unlikely to authorize
reimbursement at the hour rate requested. [Citation.]
35a
Appendix A
The court has determined the requested attorney fees
are 9.18% higher than reasonable and therefore awards
a total of $156,789.87 towards attorney fees that have yet
to be paid.
“The $107,500 already paid to Receiver’s attorneys
must also be reduced by the 9.18%, which equates to
$9,868.50 in overpayments. The court will reduce that
amount from the present/pending award ($156,789.87—
$9,868.50 = $146,921.37). The court hereby awards
$146,921.37 for Receiver’s remaining unpaid attorney fees.
“The motion requests an ‘anticipated’ additional
$25,000 for various reasons. [Citation.] There is no
evidence before the court at this time that the amount was
actually incurred and the court will not award Receiver
that amount at this time.”
The court broke down its total award of $488,548.66
in receiver costs and fees as follows:
Amount:
Purpose:
$334,936.64 Unpaid Receiver fees
between May 2019 through
September 2021
$6,690.65
Unreimbursed costs to CRG
$146,921.37 Unpaid attorney fees to
Receiver’s counsel
$0
Anticipated additional fees
incurred through to hearing
Payable to:
Receiver
Receiver
Receiver
Receiver
36a
Appendix A
The court further ordered the receiver could only
recover $459,833.62 of the total fees and costs award
amount of $488,548.66 from Sunshine due to an offset
of costs, including the $6,690.65 in unreimbursed costs
cited ante.
C. Sunshine Fails to Show the Trial Court Abused
Its Discretion in Awarding Fees and Costs to the
Receiver
In its opening brief, Sunshine argues the receiver
“engaged in misconduct and the Court erred in not
holding the Receiver liable for his mismanagement of
the receivership estate and misconduct and not denying
his request for fees and costs. [Citation.] While the Court
did find that the Receiver had overcharged and reduced
the requested amount of fees and costs for the Receiver
and his counsel [citation], Sunshine respectfully urges
this Court to find that the Court erred in awarding
him anything for any of the work related to the historic
rehabilitation of the motel and any other work after the
full funding for the remedial work was approved by the
Court in July 2017. [¶] Sunshine lost its property because
the Receiver failed to act as an impartial agent of the
Court. He should not be compensated for it.”
Sunshine has failed to offer any analysis showing the
trial court abused its discretion in awarding the receiver
fees and costs. As acknowledged by Sunshine, the trial
court awarded receiver fees and costs in an amount that is
significantly lower than what was asked for. Sunshine does
not explain how the final award necessarily includes any
unrecoverable, excessive, or duplicative fees and/or costs.
37a
Appendix A
Sunshine makes no attempt to quantify the amount
of fees or costs it considered excessive or otherwise
inappropriate due to any alleged misconduct by the
receiver. As discussed ante, we have concluded the trial
court did not abuse its discretion by allowing the receiver
to address noticed health and safety violations while
preserving the historic character of the property. As also
discussed ante, Sunshine failed to show the receiver lacked
impartiality or otherwise colluded with any other party
involved in the matter. Sunshine has therefore failed to
carry its burden of demonstrating error.
V.
The Trial Court Did Not Abuse Its Discretion in
Awarding Fees to the City
Sunshine also argues the trial court abused its
discretion by awarding excessive and duplicative attorney
fees to the City. The prevailing party in an action
brought under section 17980.7(c)(11) “shall be entitled to
reasonable attorney’s fees and court costs as may be fixed
by the court.” In addition, section 17980.7, subdivision
(d) provides: “If the court finds that a building is in a
condition which substantially endangers the health and
safety of residents pursuant to Section 17980.6, upon the
entry of any order or judgment, the court shall do all of
the following: [¶] (1) Order the owner to pay all reasonable
and actual costs of the enforcement agency, including,
but not limited to, inspection costs, investigation costs,
enforcement costs, attorney’s fees or costs, and all costs
of prosecution.”
38a
Appendix A
In its March 1, 2023 minute order, the trial court
stated: “Receiver also requests the court award City’s
attorney fees and costs associated with this action in
the amount of $1,007,778.32. City has produced evidence
supporting this amount was allegedly incurred throughout
this litigation. [Citation.] While initial attorney hourly
billing was on the high side, due to the amount of litigation
and concern over rising costs, City’s attorneys . . .
apparently agreed to a discounted flat fee hourly rate of
between $270/hr. starting October 2020, and raising each
July thereafter up to $356/hr. for work starting July 2022.
[Citation.] These new hourly rates are reasonable.
“[¶] . . . [¶]
“The Court also previously ruled City was entitled to
attorney fees and costs. [Citation.] However, the court also
finds the amount requested by City is higher than w[hat]
is reasonable by approximately 15% due to overlapping
billing and interoffice communications that should not be
billed to the client. The court will reduce City’s requested
attorney amount by 15% down to $856,611.60 for the period
at issue in this Motion.
“The $101,524.77 already paid to City’s attorneys must
also be reduced by the 15%, which equates to $15,228.72
in overpayments. The court will reduce that amount from
the present/pending award ($856,611.60—$15,228.72 =
$841,382.88). The court hereby awards $841,382.88 for
City’s remaining unpaid attorney fees.” The court further
ruled the City was entitled to recover the full amount of
$841,382.88 from Sunshine.
39a
Appendix A
We review an award of attorney fees for an abuse of
discretion. (Sanders v. Lawson (2008) 164 Cal.App.4th
434, 438, 78 Cal. Rptr. 3d 851.) “An abuse of discretion is
shown when it may be fairly said that the court exceeded
the bounds of reason or contravened uncontradicted
evidence.” (Mustachio v. Great Western Bank (1996) 48
Cal.App.4th 1145, 1151, 56 Cal. Rptr. 2d 33.)
Again, Sunshine has failed to make any showing
of how the trial court might have exceeded the bounds
of reason or contravened uncontradicted evidence in
calculating the attorney fees award in favor of the City.
Sunshine’s contention the City filed unnecessary or
duplicative pleadings and briefs is speculative. Sunshine
has not provided legal analysis with citations to the record
and pertinent legal authority in support of its argument.
We find no abuse of discretion.
DISPOSITION
The order and judgment are affirmed. Respondents
to recover costs on appeal.
MOTOIKE, J.
WE CONCUR:
MOORE, ACTING P. J.
GOODING, J.
40a
Appendix BOF THE SUPERIOR
APPENDIX B — JUDGMENT
COURT OF CALIFORNIA FOR THE COUNTY
OF ORANGE, CENTRAL JUSTICE CENTER,
FILED JUNE 13, 2023
SUPERIOR COURT OF THE
STATE OF CALIFORNIA
FOR THE COUNTY OF ORANGE,
CENTRAL JUSTICE CENTER
Case No. 30-2017-00915900-CU-PT-CJC
THE CITY OF DANA POINT,
Petitioner,
v.
THE SUNSHINE GROUP, LLC, AND
DOES 1-10, INCLUSIVE,
Respondents.
Filed June 13, 2023
Assigned For All Purposes To:
Hon. Theodore R. Howard; Dept. C18
[PROPOSED] JUDGMENT BY THE COURT
Date Action Filed:
Trial Date:
April 20, 2017
None Set
41a
Appendix B
On April 20. 2017, Petitioner CITY OF DANA POINT
(“City”) filed a Petition to Appoint a Receiver to take
control and possession of the substandard property located
at 34862 Pacific Coast Highway, Dana Point, CA 92624 (the
“Property”), commonly referred to as the Capistrano
Seaside Inn, owned by THE SUNSHINE GROUP, LLC
(“Sunshine Group”). The Court granted the City’s Petition
and, on April 25, 2017, entered an Order Appointing a
Receiver, Mark Adams (“Receiver”), pursuant to the
City’s Petition. Upon completion of the nuisance abatement
work associated with the remediation of the Property,
the Receiver filed a Motion for Discharge of Receiver,
Exoneration of Security, and Payment of Receivership
Fees. On March 1, 2023, this Court granted Receiver’s
Motion, and ordered Respondent THE SUNSHINE
GROUP, LLC to pay outstanding receivership fees to the
Receiver and the City, as set forth in detail below.
IT IS HEREBY ORDERED, A DJUDGED A ND
DECREED that:
1. The Receiver’s Motion for Discharge of Receiver,
Exoneration of Security, and Payment of Receivership
Fees is granted, and judgment is entered in favor of the
City and Receiver, as follows.
2. The Receiver is awarded a total of $459,833.62
in fees, costs, and expenses, against Respondent
THE SUNSHINE GROUP, LLC which is ordered to
immediately pay the sum of $459,833.62 to the Receiver.
3. The City is awarded a total of $841,382.88 in
attorney’s fees, against Respondent THE SUNSHINE
42a
Appendix B
GROUP, LLC which is ordered to immediately pay the
sum of $841,382.88 to the City.
4. Final judgment is entered in favor of the City and
against Respondent THE SUNSHINE GROUP, LLC.
5. Respondent THE SUNSHINE GROUP, LLC
shall take nothing in this action against the City and
Receiver.
6. As the prevailing parties, the City and Receiver
are entitled to recover costs from Respondent THE
SUNSHINE GROUP, LLC in an amount to be determined
by memorandum or motion.
7. The Clerk is ordered to enter judgment in this
matter in the City’s and Receiver’s favor forthwith.
8. Pursuant to California Code of Civil Procedure
Section 685.010, the City and Receiver shall be awarded
interest at a rate of 10% per annum on all monies awarded
pursuant to this Judgment.
9. The Receiver’s bond is hereby terminated, and
the sureties exonerated thereon.
IT IS SO ORDERED.
Dated: JUN 13 2023
/s/ Theodore R. Howard
Hon. Theodore R. Howard
Judge of the Superior Court
43a
C
APPENDIX CAppendix
— SUPREME
COURT
ORDER, FILED JULY 9, 2025
Court of Appeal, Fourth Appellate District,
Division Three - No. G062484, G062828
S291187
IN THE SUPREME COURT OF CALIFORNIA
En Banc
CITY OF DANA POINT,
Plaintiff and Respondent,
v.
THE SUNSHINE GROUP, LLC,
Defendant and Appellant;
MARK SAMUEL ADAMS,
Real Party in Interest and Respondent.
Filed July 9, 2025
AND CONSOLIDATED CASE
44a
Appendix C
The petition for review is denied.
GUERRERO
Chief Justice
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